California's State Compensation Insurance Fund has cut off
Western Insurance Administrators, its largest safety group
administrator with some 25,000 employers as clients.
The move is notable, not only because of Western Insurance
Administrators size, but also because who runs it: Frank DelRe,
former State Fund board member. DelRe, who at one time worked for
State Fund before forming a safety group, was forced to resign from
the board last fall along with Kent Dagg, who runs Golden State
Builders Exchanges and Shasta Builders Exchange. They were ushered
out after Workers' Comp Executive raised conflict of
interest questions when the two had voted as board members to
increase commissions on safety group business.
"I can confirm that we no longer have a business relationship
with WIA," says Jennifer Vargen, spokeswoman for State Fund. "We
gave notification of it last week."
Dagg did not immediately return a phone call placed to his
office. His secretary said he was on the phone when this reporter
WIA runs eight safety groups. Inside sources at State Fund
speaking on condition of anonymity say that brokers have been told
to find a new home for clients who belong to one of WIA's safety
State Fund was paying WIA an administrative fee of 3 percent of
the entire premium paid by its safety groups' members as it has
with all groups of that size, based on fee schedules obtained
earlier by Workers' Comp Executive. WIA at its zenith
accounted for hundreds of thousands of dollars in premium – some
sources say as much as $500 million in premium.
WIA's groups have a total of 25,000 employers all of which are
insured by State Fund, which gives them all a premium discount of 6
percent. Its biggest group is Western Regional Master Builders
Association, which has 16,000 employer members, all of them insured
with State Fund. The other groups, according to WIA's website,
California Merchants Safety Association, consisting of 4,000
California wholesale and retail stores.
California Automotive Services Association, safety group for
service stations and repair shops.
California Couriers Safety Association, which consists of
California Auto Dealers Safety Association, which consists of
car and truck dealers.
California Professional Electronics Association, which consists
of appliance and electronics service and repair stores.
California Gaming Industry Safety Association, which consists of
California Oil & Petroleum Safety Association, which
consists of gas and oil dealers and retail service stations.
DelRe once swung a big stick in his dealings with State Fund.
Former president James C. Tudor was at his beck and call and would
often scoot down to Long Beach if DelRe demanded it. Tudor was
earlier this year fired and a three-pronged investigation with
criminal implications is ongoing.
Filed by J. Nils Wright, executive editor