Missouri Employers Mutual plans to lay off 20 in Columbia

The local layoffs are among 35 statewide.
Wednesday, June 9, 2004 | 12:00 a.m. CDT; updated 11:23 a.m. CDT, Thursday, July 3, 2008

Missouri’s largest provider of workers’ compensation announced Tuesday that it will lay off 35 employees.

Missouri Employers Mutual Insurance of Columbia announced the layoffs as part of a reorganization plan that will consolidate certain departments and create new ones, as well as improving software and technology for employees.

MEM employs 285 employees statewide with 180 employees at the main office in Columbia.

Wendy Knorr, director of corporate communications and advertising for MEM, said the company is still determining which positions will be eliminated. Of the 35 positions, 20 will cut from the Columbia office.

MEM provides workers’ compensation insurance for 20,000 employers in the state, or more than 20 percent of market share, making them the largest insurance provider. There are 320 workers’ compensation providers in the state.

Knorr said the plan is a result of the company moving ahead into the future.

“We are no longer a start-up organization,” she said. “We are moving into the long term.”

She also said the company is in the process of receiving a rating from AM Best, a national rating company that rates insurance based on financial stability. She said the rating will “create our acceptance in the market as a preferred player.”

Knorr said MEM has certain necessary regulatory guidelines that it must meet before the end of 2005.

MEM was created by state statute as a result of few insurance companies being willing to write smaller businesses, said Randy McConnell, spokesman for the Missouri Department of Insurance. The department gave MEM a deadline of 10 years to meet the same regulational and financial requirements as other insurance companies.

“We’ve had a waiver for the first 10 years to build capital and surplus to the levels that we needed based on financial standards,” Knorr said.

Knorr said continuous market cycles have contributed to the changes in restructuring and staffing.

McConnell said workers’ compensation insurance has faced a hard market in the last three years, in which companies have little flexibility of price in gaining market share.

The increase in rates was a result of rising medical costs, McConnell said. Average rate increases went from 5 percent in 2001 to 14.7 percent in 2003. However, McConnell said, the increases have tapered off this year. He said the average rate increase this year is 2.2 percent.

He added that most companies have filed cuts for 2004, but larger companies such as MEM have had increases, therefore skewing the average rate increase upward.

McConnell said it is difficult to tell whether MEM has reacted to the market in the last three years.

Knorr maintains that although the market does play a factor, the purpose of the layoff plan is to better serve its customers.

“Our policyholders are the owners of MEM, and we are doing this so we can continue to be the No. 1 provider,” Knorr said.

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