When is a contradiction not a contradiction?

Earlier this week I testified at the S.C. Workers’ Compensation Commission public hearing. The issue was whether the Commission should change its regulations to allow an insurance company to cancel a workers’ compensation policy after only 10 days notice of non-payment of premium or leave it at the present 30 day cancellation period.

Only 3 people testified--a representative of the insurance industry, Tim Killen (director of the state Workers’ Compensation Uninsured employers’ Fund, and me. Mr. Killen and I were opposing the proposed change.

The official reason the insurance industry gives for the request is to eliminate a contradiction between state law and the Commission’s regulation. The insurance industry maintains that a law was passed in 2007 that “required” a 10 day notice for cancellation of a policy for non-payment of premium. Therefore it conflicted with the Commission’s regulation.

Sounds harmless and innocent, doesn’t it.

Well, consistency is hardly the insurance industries motivation. It’s all about the money.

I pointed out that the only losers with this change would be the small business owners who couldn’t make the payment on time due to slow or lost mail, invoices buried under paper on the owner’s desk (most of us don’t have accounting departments to pay our bills) or slow-paying customers delaying when the owners could pay bills. Shortening the cancellation period would mean a percentage of small businesses loosing coverage required by law and then later being re-written at a higher rate because their policy was cancelled. Sounds like the real insurance industry motivation to me.

Then Mr. Killen spoke and brought up another loser—everyone with a workers’ compensation policy. Mr. Killen agreed with me that more small businesses would have their policies cancelled under the proposed change. That would result in the fund that his state agency manages paying workers’ compensation claims for the employees of these newly uninsured companies. That cost to the fund would mean that every employer would pay higher premiums to replenish the fund—payments that would have been the responsibility of the insurance company under the present regulation. (I’m sure the insurance industry never thought of this benefit for them.)

But the real zinger Mr. Killen gave to trash the proposed change was this. The 2007 law in question doesn’t require a 10 day cancellation period. It says that there has to be a minimum 10 day notice of the effective date of cancellation. Mr. Killen stated flatly that there was no contradiction between the law and the current regulation. The Commission can have any cancellation period it wants; it just can’t be less than 10 days.

A contradiction that’s not a contradiction brought to you by the insurance industry.