HEMIC will pay $5M dividend to members
By Rick Daysog
Advertiser Staff Writer
The Hawaii Employers' Mutual Insurance Co., the state's largest workers' compensation insurer, said it will pay a first-ever dividend of $5 million to members.
HEMIC, which was founded during the workers' compensation crisis of the mid-1990s, said it is able to pay the dividend after its surplus doubled to a record $103 million in 2006 from the year-earlier's $51.4 million.
Bob Dove, HEMIC's president and chief executive officer, said that more than half of HEMIC's 6,700 members will qualify for a dividend, which averages out to about $1,300. The dividend is payable to policyholders of record on March 31, 2007.
"This is a watershed event," Dove said.
"Until now, our focus had to be on building surplus to provide financial security for our policyholders and injured workers. Now that appropriate surplus is achieved, our focus has shifted to returning any profits not needed to bolster surplus."
The dividend comes as Hawai'i's workers' compensation market has improved after rates began to climb during the early part of the decade.
State Insurance Commissioner J.P. Schmidt said average workers' compensation rates are down 12.3 percent for 2007 and 18.2 percent in 2006. In 2005, the rates dropped 3 percent, he said.
According to Schmidt, rates began dropping three years ago as workplace injuries declined partly as a result of new work-safety policies implemented by the state Department of Labor and Industrial Relations.
"We are certainly in a much better position now than we were 10 years ago, when they began considering the formation of HEMIC," Schmidt said.
HEMIC is a mutual insurance company founded by the state Legislature and Gov. Ben Cayetano in 1996 when workers' compensation rates were soaring and employers were having difficulties buying coverage. Unlike traditional insurers, the company must provide coverage for nearly all Hawai'i employers who request a policy.
Last year, the company collected about $87 million in premiums, or about 24 percent of the local market.
Reach Rick Daysog at rdaysog@honoluluadvertiser.com.
