Abstract

On July 7, 1967, the Arizona Industrial Commission announced a rate increase, which ranged from thirty to eighty-five percent, for all employers except self-insurers. This increase, effective July 1, 1967, caused an average fifty percent boost in workmen's compensation costs for ninety percent of Arizona employers. The commission considered the rate increase necessary to eliminate a deficit in the reserve for unpaid claims of eight million dollars and to keep the fund solvent in the future.

On July 14, 1967, the Governor appointed a special investigating committee to determine the reasons for the rate increase. As a result of information obtained by the committee and reports submitted to the legislature by the consulting firms of Peat, Marwick, Mitchell & Co. and Arthur Stedry Hansen Consulting Actuaries, Inc., both the house and senate introduced bills during the regular session of the 1968 legislature to reorganize the commission. However, the legislative leaders decided that not enough time remained in the regular session to hear all the interested parties and to properly draft and enact an acceptable bill. Thus, neither bill was passed by both houses.

Subsequently, the Governor called a special session of the twenty-eighth legislature to reorganize the commission. Prior to the beginning of the session, extensive public hearings were held to determine the viewpoints of various interest groups, including organized labor, contractors, the insurance industry and self-raters.

Thereafter, a joint committee of the house and senate drafted a bill which was introduced at the beginning of the session as house bill 1. This bill, as amended by both the house and senate, was passed on June 8, 1968, signed by the Governor on June 12, and will become effective on January 1, 1969. Claims for injuries occurring prior to January 1, 1969, will be processed in accordance with the procedure and benefit levels in effect prior to the effective date of the Act, but petitions to reopen will be processed in accordance with the procedural provisions of the new law. Most of the recommendations of the consultants were followed, and the Act accomplished its basic purpose of reforming the organizational structure and functions of the Industrial Commission.

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