History-sm

Meridian Communications,
CM Management, Price
Waterhouse, and Milliman
& Robertson, who committed
their time and talents to
successfully meeting the
required deadline.
From day one, the plan of
operations at KEMI was
to achieve the mandate
established by the
legislature, but to do it in
such a way that made KEMI
more than just a “here today,
gone tomorrow” solution
to a problem; more than
just an insurance company
for workers’ compensation;
and more than just an
employer for those first employees determined to
see the company succeed. The ultimate plan for
KEMI was to make the organization the best workers’
compensation insurer operating in the Commonwealth.
One of the first objectives toward reaching that goal
was to develop and execute a transition plan with NCCI
to ensure that KEMI was prepared to issue coverage
for any entity that desired it. Agencies servicing
accounts were notified of their options. At the same
time, KEMI was establishing a culture of customer service
that would educate and assist agents as they began
placing accounts with the new organization. By July 15,
1995, KEMI was fully operational; operating systems
and employee training were complete and customer
service values were in place. By August 1, the first
applications for coverage were coming through the door.
Even in those early days, the culture at KEMI was
defined by the sense of responsibility to the cause and
a desire to do the right thing right, building integrity
for the organization and establishing a defined process
for doing business. As difficult as it was at the time
for most KEMI employees to imagine what the first year
of operations would be like, Roger and the board had
a greater vision and established long-term goals for
financial compliance; safety, loss control, and managed
care services; actuarially sound rates; low operating
expenses; experienced employees; competitive and
innovative products; competitive producer commissions;
data collection; and, ultimately, to make KEMI the
“Market of First Choice” as the leading writer of workers’
compensation insurance in Kentucky.
KEMI’s First Rate Filing and
Writing the First Policies
During KEMI’s first year, there were countless daily
obstacles – all critical in nature – and one of the most
significant related to KEMI’s first rate filing, which was
publicly announced in June of 1995. After months
of evaluating data, actuaries for the organization
recommended that the board make a rate filing that
would increase rates substantially for businesses that
had been insured in the pool. In explanation, Mr. Fries
conceded that the rate increases would not be popular,
but stated, “Our job is to take the lead in getting the
Kentucky workers’ compensation system under control;
we will begin providing coverage on September first
with the goal of putting the system on sound actuarial
footing. Other benefits will follow. These include better
health and safety conditions for Kentucky workers,
a better business environment to attract new industry
to the state, and yes, even lower premium rates are
possible once the system is on solid ground.” Though
the increases required were a consequence of previous
mismanagement of the assigned risk pool, Mr. Fries was
correct that they would not be well-received. Legal
action was necessary to resolve the matter and receive
final approval of the rates from the department of
insurance.
4