Self-Insured WC Issues Aired At NAIC

By E.E. Mazier

NU Online News Service, June 10, 2:04 p.m. EST, Philadelphia?A joint panel's three-year effort to produce a report on employee leasing firm workers' compensation record keeping failed to win a complete seal of approval from state regulators here.

At the same session Saturday, the unit involved in drafting the leasing firm report, heard a plea for streamlining of the workers' compensation regulations that apply to self-insured employers with nationwide operations.

The action here occurred before a joint working group of the National Association of Insurance Commissioners, based in Kansas City and the International Association of Industrial Accident Boards and Commissions, Madison, Wis.

Their joint mandate is to research and report on regulatory issues in workers' compensation that have an effect on both state insurance departments and the groups that administer workers' comp systems in the various states.

According to an IAIABC statement the proliferation of employee leasing and professional employer organization sparked the study being considered?because of a concern their involvement will "complicate or impede the enforcement of laws" with record keeping coverage a major issue.

Most of the working group's Report on Employee Leasing and Professional Employer Organizations was formally adopted, but there was one exception.

The exception stemmed from the perceived need for the NAIC/IAIABC Working Group to clearly define "master policy." The term is used in connection with a single policy of workers' comp insurance issued to an employment services outsourcing firm.

In the report, it was noted, some states allow this master policy approach at the insurer's discretion in the voluntary market, while other states require "multiple coordinated policies," or separate policies for each client, in the residual market.

Separately, representatives from the Santa Ana, Calif.-based Self-Insurance Institute of America Inc. raised the concerns of single, self-insured employers.

James Blinn, former SIIA chairman and now a consultant to the group, and SIIA's Washington counsel George Pantos, asked the working group to take on a project to come up with recommendation for harmonizing state insurance regulatory requirements for employers who self-insure workers' comp.

According to Mr. Pantos, statistics show that single employers increasingly are moving toward self-insurance. In fact, approximately 40 percent of all workers' comp program premiums and premium equivalents are covered by self-insured arrangements, he said.

Mr. Pantos explained that many companies prefer to assume liability for workers' comp as a means of avoiding the administrative costs associated with insurance policies and of ensuring higher quality claims handling.

He then told the working group that regulatory variations among the states were inefficient and "often result in unnecessary cost and administrative burdens" for the nation's multi-state self-insured companies.

Mr. Blinn outlined some of the regulatory conditions causing these burdens:

? Minimum premium levels to qualify to self-insure?Mr. Blinn said that some states have these while others do not. He said that in Texas; for example, premium level requirements are so high that small employers are having a hard time meeting them.

One way to ease this burden, Mr. Blinn suggested, is to have reciprocity among the states in the examination of employer premium volumes.

? Reserve levels that vary from state to state.

? Varying reporting requirements, including what a self-insured employer must file with an insurance regulator and how frequently (annually, quarterly, etc.).

Mr. Blinn suggested that the reporting requirements might present an opportunity for uniformity among the states.

In the end, because no one from the IAIABC was present at the meeting, the working group decided to advise the executive board of the IAIABC of the issue to get a sense of that organization's position. After that, the NAIC/IAIABC Joint Working Group would determine what kind of work product it would produce to address the concerns raised by SIIA.

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Self-Insured WC Issues Aired At NAIC

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