Workers’ compensation insurance pays medical expenses and replacement wages for employees injured on the job. It also protects employers from lawsuits.  While efforts were made to establish coverage in the US starting around 1906, the first state law was not passed until 1911, around the time of the horrific Triangle Shirt Waist Factory Fire in NYC which killed 146 garment workers.  Workers’ comp was established in Maine in 1916.

 

Over the years, workers’ comp expanded with uneven coverage and costs among states. In the 1970s, a national commission was formed to straighten out the coverage mess. Maine began offering every suggested reform and benefit. Increases in benefits, workers covered, and soft tissue injuries as well as traumatic events caused Maine to become the most expensive state in the country.  Insurers left the state in droves.

 

Reforms were tried, but were not successful or were not allowed time to work. By 1991, then Governor McKernan caused a state shut down by blocking the budget, vowing no budget until there was workers’ comp reform. Since that action caused state liquor stores to be closed over the July 4 holiday(!), he successfully raised the profile of the issue to finally drive a resolution.

 

A Blue-Ribbon Commission identified key areas that needed to be addressed including reducing benefits to the national average, creating a dispute resolution system, and forming a mutual insurance company to be the guarantor of insurance in Maine.  MEMIC (Maine Employers Mutual Insurance Company) opened its doors in January 1993 to be a market-based solution to Maine’s workers’ comp issues.  Owned by their policy holders, they also became a partner for workplace safety with focus on reducing injuries and costs over time and helping get Maine people back to work.

 

In the five years from 1993 to 1998, worker injuries were down 30% and costs were down by more. MEMIC began to return capital originally collected to fund the company and competition began returning to the Maine market. Encouraging a partnership in safety between employers and employees brought benefits to the company, to the worker, and to the economy.

 

Today, MEMIC is the largest workers’ comp carrier in Maine, covering 62% of workers in the state. In addition, they have diversified their business to other states where they now underwrite more coverage than they do in Maine, while still being owned by their policy holders in Maine. In the past 25 years, workplace injuries are down 40% and rates/costs are down 60%.  With $1.3B in assets, they employ about 300 people in Portland and are consider the top workers’ compensation company in America.