State Compensation Insurance Fund is confirming that it’s seeking an author to carry legislation that would allow it to sell workers’ comp policies outside of the state, spokeswoman Jennifer Vargen tells Workers’ Comp Executive.  But this is not a new idea. It is a proposal that was bandied about during the presidency of Jim Tudor, who was removed by Governor Schwarzenegger.

“We’re interested in a pursing a proposal to amend the insurance code to be able to offer out of state coverage for California employers,” Vargen says, adding that the idea is to cover employees such as an out of state sales force that works for a company with operations predominantly in California.

She says that out of the 26 state funds 16 offer this kind of product. The goal is to make it easier for both brokers and employers to do business State Fund, and it’s in keeping with its whole plan to make a more efficient State Fund. Currently, employers must purchase separate policies for out of state employees.

“The actual mechanics haven’t been worked out yet. We need to see what other state fund’s do. We’ll work with partners who have expertise in this area. Brokers other insurance companies, we would partner [with them],” she says, noting that products like this already exist.

But this could be a way for the embattled, financially challenged and unrated State Fund to attempt to shore up its sagging financials. Alternatives include reinsuring a fronting carrier which is unlikely to require legislation.

Vargen says this is the first time that State Fund has pursued this option and is responding to the concerns of brokers, who have brought this up as a way that would make it easier to do business with State Fund. “The private market is serving employers very well. We’re just trying to be prepared to serve employers and brokers efficiently. These are more complex risks. It would really streamline the process for employers and brokers.

Private carriers are saying they will oppose such a move.

Vargen says she has no hard and fast numbers on how many employers this would effect.

-30-