CXII From The Inside

By: Publius

Revisions to Self-Insured Group Regulations

   Reviewing the revisions to regulations recently released by the Department of Industrial Relations-Office of Self-Insured Plans (DIR-OSIP), my mind is drawn to the fact that these revisions make an industry that is already well regulated within the state of California even better. I say this not because self-insured groups (SIGs) in California already have the best SIG regulations in the country and are mandated to operate with an 80% actuarial confidence level, plus expenses, plus a security deposit maintained at 135% of losses from the past five years, plus the average of the past five years of losses, but because SIGs are a great way for smaller to medium-size employers to reap the benefits of being self-insured.

   Reviewing the revisions to regulations currently proposed, I note that these revisions came about from numerous meetings between the SIG industry and the manager of OSIP to discuss and collaborate on how newly revised regulations (adopted March 2009) could be made even better. The revisions also have taken into account several of the recommendations made in the recent report of the Commission on Health and Safety and Workers’ Compensation (CHSWC).

   Unlike other industries that may try to hide from issues that may cause discomfort, the SIG industry has worked to embrace the recommended revisions and add even more proposed regulations to the list to make itself even better.

   Taken individually, these revisions provide transparency to the industry, as recommended by the CHSWC report, by allowing OSIP to provide the records of a SIG to the Self-Insurers’ Security Fund (SISF), without the SIG having to be in financial distress prior thereto. Other revisions allow OSIP to allow SIGs (and other self-insureds’) security deposits to be held in the form of laddered CDs, by a credit union or bank, which protects the funds in the security deposit against the failure of a financial institution. OSIP has also proposed saving self-insureds’ money by not placing CDs into the State Treasurer’s Office, which is stated to save the self-insured industry an average of $45,000 per year. With these additional protections and savings, not only SIGs, but all self-insureds, will be able to use these funds to remain solvent, so they will be in business and have additional funds to pay their employees and make their workers’ comp payments.

   Other revisions will require SIGs to provide OSIP with their Actuarial and Audited Financial Reports earlier in the year, so that they can be monitored in a timelier manner. SIGs will also be required to file their “rates” and any deviations therefrom to allow a more efficient monitoring process for the industry. Last, several other technical revisions will require SIGs to maintain “no less than” $25 million in excess insurance. This revision alone more fully protects injured workers whose employers are members of a SIG against a SIG maintaining too low an amount of excess coverage.

   Overall, these revisions allow OSIP and the SIG industry to provide better protections to the employer members of SIGs and the employees who are provided workers’ comp coverage by them. Publius applauds the self-insurance industry and its regulators for taking these steps to make the industry better.

PUBLISHERS' NOTE: Publius is written by a consortium of writers, sometimes internal, most frequently external. Workers' Comp Executive believes that it has the responsibility to air most viewpoints and welcomes the comments of its community on any subject. Publius does not necessarily represent the views of this publication.