NU Online News Service, May 16, 9:12 p.m. EDT–A bill signed into law last week providing loan money for a nearly-bankrupt fund paying some New York workers' compensation claims should keep the operation afloat though 2006, according to an Assembly official.
Christine Olli, Assembly Insurance Committee associate director, said how the fund does after 2006 will depend on "what if any other insolvencies [by workers' comp insurers there] might be in the future."
The law signed last week, bailed out the Workers Compensation Security Fund, which pays comp claims for workers whose companies have insurance coverage with carriers that become insolvent.
"It's short term. We think more needs to be done," said Michael Moran, a spokesperson for the American Insurance Association's Albany, N.Y. office.
Gary Henning, AIA assistant vice president for the Northeast Region, said his organization is ready to work with the legislature and New York Republican Gov. George Pataki "to construct a solution for the long-term that will enable the fund to operate efficiently in order to continue meeting the needs of injured workers, employers and insurers."
On Wednesday, the governor signed a measure which permits the state insurance superintendent to lend up to $70 million to the WCSF using the assets of liquidated insurers.
The new law also permits the superintendent to increase the assessment that private workers' comp carriers pay in support of the WCSF up to 2 percent.
At the beginning of the year, the state's insurance department revealed that the fund would be without cash to pay 7,500 injured workers' claims by the end of February. At that point, the fund was kept in business with $9.1 million secured from estate monies held by other states for insolvent insurers.
According to a notice put out by the Assembly Insurance Committee, the "precipitous nature" of the insurance department's disclosure that the fund was in trouble "and failure to provide information requested by the legislature, highlights the need for a thorough examination of why and how this fund became impaired and, to inform the legislature on steps to address the problem."
The notice also criticized the department's administration of insurer rehabilitations and insolvencies as "inefficient, costly, lacking in oversight and secretive."
A spokesman for the department said the department had subsequently impressed the committee with its willingness to share information. He said he would have comment later on the other criticisms.
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