SIIA Rejects New York Task Force Findings Regarding SIGs
June 16, 2010 – The Self-Insurance Institute of America, Inc. (SIIA) today denounced the findings of a task force created by the New York state Legislature concluding that all group self-insured workers’ compensation funds (SIGs) operating in the state should be shut down by the end of the year and encourages the state to consider industry-backed alternative solutions.
The Task Force Report on Group Self-Insurance was prompted by the failures of several SIGs over the past two years and has now been submitted to the Legislature and the governor for consideration.
“Clearly there were some New York SIGs that were operated in a negligent way, but we believe the task force recommendation is an overreaction,” said SIIA Chief Operating Officer Mike Ferguson. “The industry is prepared to work with the state to develop a new regulatory structure which would greatly reduce the possibility of future failures and also assist the state is addressing the financial deficit associated with the failures.”
Interestingly, the report also acknowledges the benefit that groups have offered their members, through the years, particularly the emphasis on safety and loss prevention, aggressive return to work programs and rate stability. However, it seems the Task Force made its recommendations based solely on the actions by the SIGs that become insolvent, while failing to consider the benefits that groups offer to more than 4000 employers in New York State. Those employers should be allowed to make their own informed decisions regarding their involvement in group self insurance.
Moreover, active New York SIGs have successfully complied with ever increasing regulatory standards. The report concludes that these efforts have resulted in these groups having an overall funding ratio of 109% and surplus of more than $64 million. Such results compare favorably to the traditional insurance industry.
As the task force report points out, SIG legislation passed in 2008 was designed to ensure that groups have increasing financial stability and accountability. That legislation was aimed at ensuring transparency among the groups’ key agents and to ensure proper group administration. SIIA supported this legislative initiate and now calls on the New York Legislature and governor to give the new laws a chance to work, by implementing the appropriate rules and regulations.
As the task force correctly points out, the Group Self-Insurance model is reliant on the good faith legal compliance of trustees, administrators and their key agents. The industry agrees with that conclusion and is prepared to comply with the enhanced regulations that will be forthcoming.
There are currently 34 other states that permit group self insurance workers’ compensation funds and are able to successfully regulate such regulations.
SIIA is a non-profit trade association that represents the business interests of companies involved in the self-insurance/alternative risk transfer marketplace. It recently released a publication entitled “Understanding Group Self-Insured Workers’ Compensation Funds,” which is the only such comprehensive document available explaining how SIGs operate.