By George Hohmann
The Charleston Daily Mail
CHARLESTON, W.Va. — BrickStreet Mutual Insurance Co. is raising the premiums it charges volunteer fire departments for workers’ compensation insurance, which has sparked an angry reaction at financially struggling departments statewide.
The annual premium for the Sissonville Volunteer Fire Department is going up 81 percent, from $2,055.21 to $3,728.41, said Tom Miller, the department board’s secretary who also represents West Virginia on the National Volunteer Fire Council.
The Wayne Volunteer Fire Department’s premium went up 99 percent, or $24,000 a year, Miller added.
“There’s not a volunteer fire department in the state that has the funds it needs to do its job,” Miller said. “It’s just ridiculous.
“There are fire departments talking about taking a day and stop running calls. Departments in the coalfields talking about a strike. There’s a lot of angst and concern about this. I’m not necessarily in support of that but at this point I’m open to any and all options.”
Handling workers’ comp for volunteer firefighters has been a losing proposition for BrickStreet and it will remain so even with the premium increase, officials said.
Company President and CEO Greg Burton said for every dollar it has been receiving in premiums, it has been paying out over $6 in claims and expenses.
BrickStreet has been charging the volunteer fire departments premiums based on the number of hours worked multiplied by the minimum wage, he said. But BrickStreet has been paying benefits based on a volunteer’s regular job. That means someone who makes $60,000 as an accountant and gets hurt as a volunteer firefighter gets benefits based on the wages he earns as an accountant.
Burton said BrickStreet receives a total of about $500,000 a year in premiums from all of the VFDs but has been posting losses of more than $3 million a year.
“We are adopting the National Council on Compensation Insurance rate, which calls for volunteer fire departments to pay a premium based on the hours worked times the average wages of a paid fireman,” Burton said. “This will double the premium we receive to get us to about $1 million but still we will be way under in terms of what we pay out.”
Miller said the Sissonville department responds to 550 to 600 calls a year and is very active in training.
“You have to report your man hours,” he said. “Where that hurts us is, the more man hours you have, the higher your premium because it is based on man hours.”
“We get the exact same amount of state money as the volunteer fire departments that run 20 calls a year. But because we run more calls, we pay a higher premium. “We get the exact same amount of county money.
Miller objects to BrickStreet’s decision to classify a volunteer firefighter at the same hourly rate as a career firefighter.
“If a career firefighter has a heart attack it is covered under workers’ comp. If a volunteer has one, it is not,” Miller said. “And they’re wanting us to rate our entire workforce on the average salary of $14.54 an hour, which is the average salary of a career firefighter.
“But by the same token, if I have a firefighter who makes the minimum wage, he’s not going to get compensated at $14.54 an hour — he’s going to get compensated at that minimum wage rate.”
“All we’re trying to do is go out and help our communities,” Miller added. “It seems we’re constantly being subjected to rules and regulations that make it prohibitive for us to stay in existence.
Kanawha Commission President Kent Carper said: “BrickStreet’s the ones who have caused this to happen and they’re just finding this out? The folks who are going to suffer are the citizens and the volunteer fire departments. BrickStreet is just coming up with schemes to make more money.”
BrickStreet was the sole provider of workers’ comp insurance in West Virginia from Jan. 1, 2006, when the state privatized the business, until July 1, 2008. That’s when the market opened to competition for all entities except government agencies.
Competition for government agencies’ business — including volunteer fire departments — begins July 1. That means volunteer fire departments that are unhappy with BrickStreet’s quote will have the option of getting coverage through another company.
“Some of us raised legitimate concerns about this rush to privatize workers’ compensation,” Carper said. “It was seen as a panacea and everything would be better. With all due respect to BrickStreet, I have no idea what some of the owners of BrickStreet have made. It’s a private business. Everything is not better. I think people are beginning to see that.”
“In Kanawha County alone, if you just had to replace all of the volunteer fire departments with minimum staffing and you paid them $14.70 an hour, it would cost Kanawha County $15.9 million a year. That $14.70 figure is based on a federal government study that places the value on a volunteer in 2007. We didn’t make these numbers up.
Miller said he would like for the county or another entity to pay the department’s workers’ comp premium
“Do the State Police have to stand out in the street and collect money? Do they have to have boot drives? Do they have to sell hot dogs to buy police cars? I’m not critical of them, but we are the only public safety service sector that, if we need it, we have to go out and raise it.”
Carper pointed out that BrickStreet paid off its $200 million startup loan from the state seven years before the deadline and built “an eye—popping building in downtown Charleston.”
“They swim in cash by not paying claims,” Carper alleged. “People do deserve workers’ comp benefits. Now it appears to me the day of reckoning is coming. They no longer have the monopoly they had.
“Under the old system it was said the rates were built into an old, inefficient system. I think there will be other businesses that won’t be pleased with their bills. I’m not pleased with it at all. This is the kind of thing we’ve seen from the state for years. They keep sending us unfunded mandates.”
Copyright 2010 Charleston Newspapers