Governor Arnold Schwarzenegger proposes to sell off $1 billion of the State Compensation Insurance Fund (SCIF) book of business, according to his latest May revise proposal. The item is billed as a new proposal, but Workers’ Comp Executive wrote last year that the sale of SCIF was being seriously discussed during that budget crisis.
The governor’s current proposal is light on details and simply says it is looking for a private entity to buy a $1 billion portion of the book, with SCIF remaining the insurer of last resort. But the Assembly Republican Caucus last year reviewed a presentation by Workers’ Comp Executive publisher J Dale Debber on what a sale of some or all of SCIF assets might entail and how these proceeds could be used to help the state budget.
The idea was also discussed in the Wilson administration in 1998 but never gained any traction. The proposal then was for privatization, but now other mechanisms, such as a loss portfolio transfer, are being considered. Under such a plan, another carrier or reinsurer would pay cash in trade for some or all of SCIF’s reserves, and SCIF would get the present net value of its reserves.
Due to the evolving nature of the proposal under discussion, look to the online edition of Workers’ Comp Executive for more in-depth coverage.