SALEM (AP) - The State Accident Insurance Fund is under attack on two fronts.

One one side, Democrats and labor unions say the state-owned, semi-private workers' compensation insurer is not representing injured workers. They want the Salem-based public corporation to become a regular state agency.

At the same time, private insurance companies counter that the state should sell off SAIF to a private insurer because the fund has an unfair competitive advantage.

Lawmakers debated the issues Tuesday while considering a House resolution that would create a task force to study whether SAIF and its 750 Salem employees should be privatized or made into a pure state agency, as it was until 1980.

As a public corporation, SAIF is able to compete better with private insurers. As a nonprofit, it is supposed to keep rates low for business and assure workers' comp coverage is widely available.

The bill's sponsor, Rep. Judy Uherbelau, D-Ashland, contends that SAIF has the benefits of being state-owned - but carries none of the burdens. Injured workers complain SAIF doesn't care about them, she said.

At the first hearing on her bill Tuesday, insurance executives complained that SAIFs $2.5 billion reserve allows it to compete unfairly. It can invest the reserves, watch them grow tax-free, then shower some of the earnings as dividends to clients, critics said.

``This allows them to be predatory, almost, in their pricing,'' said Larry Hollen, president of American Home Assurance Co. of New York City.

At a minimum, the Legislature needs to put some restraints on how SAIF distributes dividends from its reserves, said Joe Gilliam, an Oregon lobbyist for the National Federation of Independent Business, a group supporting the bill.

The insurance fund argues that competition already exists in the market.

``We've undergone 16 major external examinations since 1990,'' said SAIF lobbyist Chris Davie, ``so another task force is not needed.''

Workers' comp rates in Oregon have dropped 55 percent since 1990, and SAIF now controls only 31 percent of the market, compared to 37 percent four years ago, he said. Furthermore, 62 companies underwrite at least $1 million worth of workers' comp insurance in the state, Davie added.

However, SAIF does take credit for determining market prices. According to Davie, it beats other companies' rates, causing competitors to drop theirs, bringing savings to all Oregon employers.

SAIF fears it couldn't compete as well if it were a full-fledged public agency again. Then it would be subject to the dictates of legislative budgeters, state hiring freezes and other policy uncertainties.