New Rules For Self-Insured WC Sought

James Blinn, former SIIA chairman and now a consultant to the group on workers' comp matters, along with SIIAs Washington counsel George Pantos, asked the working group to take on the project of coming up with recommendations to harmonize 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 nations 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 organizations position. After that, the NAIC/IAIBABC Joint Working Group would determine what kind of work product it would produce to address the concerns raised by SIIA.

Meanwhile, in a related development, the joint working group formally adopted, with one exception, its "Report on Employee Leasing and Professional Employer Organizations."

The exception stems 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 employment services outsourcing firms.

As noted in the adopted report, some states allow this master policy approach at the insurers discretion in the voluntary market, while other states require "multiple coordinated policies," or separate policies for each client, in the residual market.

With a growing number of employers leasing staff members, questions are being raised about workers' comp regulations to protect such employees.

Reproduced from National Underwriter Property & Casualty/Risk & Benefits Management Edition, July 8, 2002. Copyright 2002 by The National Underwriter Company in the serial publication. All rights reserved.Copyright in this article as an independent work may be held by the author.