Idaho legislature considers trial for districts to exit state insurance fund

Idaho's House Commerce and Human Resources Committee has taken a significant step towards reforming workers' compensation insurance for public employers. During a meeting on February 13, 2025, the committee discussed a trial program that allows smaller specialty districts to opt out of the state insurance fund and explore private market options for their workers' compensation needs.

The initiative aims to address concerns about the risks associated with the current state insurance fund, which was established to protect public entities from unreliable insurance providers. Representative Fuhrman highlighted the historical context, noting that past issues with shady businesses prompted the creation of the fund. However, he emphasized that recent regulatory changes have improved the stability of the insurance market.

The trial program will initially exclude school districts but will allow smaller districts to seek coverage in the open market for a five-year period. This approach is intended to evaluate whether these districts can secure better rates and services than those provided by the state fund. The committee believes that specialized insurance companies can offer tailored solutions, particularly for high-risk sectors like fire and emergency services.

Representative Tanner raised concerns about the potential risks of smaller districts operating outside the larger insurance pool, questioning whether they could achieve better rates independently. In response, Fuhrman pointed out that specialized insurers have successfully reduced costs for similar entities by focusing on common injury prevention and rehabilitation strategies.

The committee's decision to implement this trial program reflects a proactive approach to improving workers' compensation for public employers in Idaho. By allowing districts to explore alternative insurance options, lawmakers hope to enhance coverage quality and reduce costs associated with workplace injuries. The outcome of this initiative will be closely monitored, with the legislature set to review its effectiveness after five years.