The California Self-Insured Security Fund and self-insured groups might be breaking bread over a piece of legislation that would require public disclosure of SIG financial statements and an actuarial analysis. AB 879 (Hernandez D-West Covina), sponsored by the Security Fund, passed the Assembly Insurance Committee with unanimous support. But concerns are surfacing that the bill might get watered down, even stripped of the public disclosure requirement.
SIGs that have spoken out say they oppose public disclosure. Not wanting to appear as opposing transparency, SIGs say they support disclosure to the Security Fund. The point of the Hernandez bill is public disclosure, a position the Security Fund supports. It now appears that the Security Fund is shifting its position toward just making sure it gets the financial information.
“We don’t want to limit it to just public disclosure,” says Jeff Pettegrew, executive director of the Security Fund. “Whether it’s public or not, we want to make sure the Fund gets that information.”
The shift gives the SIGs some cover by allowing them to champion transparency while at the same time negotiating away public scrutiny.
Hernandez’s office confirms that there are discussions going on. “They are. The definitely are. There may be some consensus in the coming weeks,” says Pedro Salcido, a consultant for Hernandez’s office.
The Security Fund is the financial backstop for self-insured employers including SIGs. If a self-insured employer defaults, the Security Fund pays the claims. It says it can better monitor SIGs if it gets the same information that the Office of Self-Insured Plans receives.
During the committee hearing on AB 879, SIG administrator Joe Burgess was asked why SIGs oppose public disclosure. He said that SIGs were in discussions with and support disclosure to the Security Fund, saying in pertinent part, “We fully expect we’ll arrive at that decision.”
Hardly an insurance industry bill, lobbyists representing occupational doctors, applicant attorneys, and employers all spoke in favor of AB 879.
“I don’t know what as an association we’re going to do,” says Theo Pahos, lobbyist for the Association of California Insurance Companies. “If my association wants to move forward, despite what the Security Fund wants to do, then that’s what we’ll do.”
Pahos adds that one of its members is owned by a SIG, and the member has expressed no concern about the language in the Hernandez bill. The only financial information that would be disclosed to the public would be that of the SIG itself, not the individual members. Majestic Insurance Company, an ACIC member is owned by CRM.
The bill’s analysis contains a proposed amendment that would clarify the language to say an actuarial certification of reserve adequacy would be made public as opposed to the analysis.
“We’re not looking for proprietary information. If [the SIGs] think the actuarial analysis provides too much information, we’ll negotiate something less,” Pahos says.