Move To Add School Self-Insureds To Guarantee Fund
By Caroline McDonald
NU Online News Service, June 11, 1:57 p.m. EDT?An insurers trade group said they are opposing proposed California legislation to retroactively give school district self-insurance programs for workers' compensation, many of them faltering, the protection of the state's insurance guarantee fund. [@@]
Sam Sorich, spokesperson for the Association of California Insurance Companies, explaining the group's objections, said ACIC finds it unfair "to allow entities that were not covered by the guarantee fund to come in and tap those funds even though they never paid any assessment."
ACIC Vice President and General Counsel Jeffrey J Fuller said the bill, SB 574, authored by Sen. Dede Alpert, D-San Diego, which would make the guarantee fund liable for the districts' self-insured workers' compensation programs, was never envisioned under the law and was something for which the fund "could not and did not plan."
The bill has been passed out of the Senate and is in the Assembly Insurance Committee, set for a hearing within the next two weeks.
Mr. Sorich in Sacramento, Calif., said the obligations of the insolvent self-insured workers' comp programs added up to about $8 million, involving 100 school districts. He noted that "there are some outstanding claims right now."
He emphasized that, "besides the money, our opposition is on the principal. If there is any money involved at all, it doesn't seem to be fair to allow entities that were not covered by the guarantee fund to come in and tap those funds even though they never paid any assessment."
Mr. Sorich added that the Workers' Compensation Account, in the Workers' Compensation Guarantee Association?all part of the California Insurance Guarantee Association?is "besieged by its liabilities and it certainly doesn't seem to be the right thing to do to further burden it with claims that didn't even belong in the guarantee fund's system."
Mr. Fuller said that it would be "unfair to ask policyholders who purchase insurance from the regulated market to subsidize those who have chosen to self-insure."
The CGIF collects surcharges on insurance policies written in California. The money collected is used to pay claims pending against insolvent insurers.
A number of private and public entities, such as school districts, choose to self-insure rather than buy traditional policies from licensed insurers, ACIC said. Those who self-insure do not pay a surcharge to CIGA. As a result, they are not eligible for CIGA assistance if and when they falter financially.
"Now some California school districts want to change the law so they will obtain guarantee fund coverage retroactively even though they had not purchased workers' compensation policies subject to the guarantee fund surcharges," Mr. Fuller said.
© Arc, All Rights Reserved. Request academic re-use from www.copyright.com. All other uses, submit a request to TMSalesOperations@arc-network.com. For more information visit Asset & Logo Licensing.