SIIA Praises New Workers' Compensation Self-Insurer Rules in CA
SIMPSONVILLE, South Carolina (March 19, 2009)
The Self-Insurance Institute of America, Inc. (SIIA) today announced its support for new regulations governing the operating of group self-insured workers’ compensation funds (SIGs), which are the product of more than four years of development and debate.
The new rules allow groups to determine their evaluation method regarding the financial qualifications of applicants and include provisions for including similar risk from different SIC codes. This regulatory approach will reinforce a high mandated security level for groups but which also enact provisions that are expected to encourage growth in the programs.
California requires an 80% actuarial confidence level for self-insured groups, a reserve threshold much greater than is required for traditional insurance companies. Stand alone self-insured companies have no mandated confidence level. Self-insured groups post security deposits with the state in the same manner as individual self-insured companies but are required to have a level of excess insurance coverage for catastrophic claims that is not required of stand alone self-insureds.
“We are pleased that regulators in the country’s largest workers’ compensation marketplace recognize the important role played by SIGs, particularly with regard to providing an affordable risk financing solution for small and mid-sized employers,” said Chris Mason, chairman of SIIA Workers’ Compensation Committee.
Mr. Mason noted that the first California SIG began in 2002, but the real emergence of groups occurred in 2004 and 2005 as elevated rates and an absence of insurers exacted a toll on employers.
There are 26 self-insured groups operating in the state with $5.2 billion in covered payroll and $180 million in annual contributions. Several groups have recently elected to wind down operations in response to a prolonged soft insurance market and tight credit conditions. The largest California SIG represents $1.1 billion in covered payroll.
SIIA is national trade associations that represent companies involved in the self-insurance/alternative risk transfer industry. Additional information about the association can be accessed on-line at www.siia.org, or by calling 800/851-7789.