The New York Workers' Compensation Board hopes to put a system in place within the next two years to give financial strength ratings for the 80 self-insurance trusts it oversees, a board official said.
Its effort comes as 30 of the trusts have been placed in an under-funded category, and 12 of them have needed to charge their members a special assessment to make up shortfalls revealed by audits.
Mary Beth Woods, the board's director of licensing, said the letter-graded rating system would be used to reveal the strength of a fund that is classified as under-funded.
The classification at this point reveals little. "Under-funded? Does that mean you're 89 percent or 20 percent funded?" said Ms. Woods. She added that grading would also provide a historical perspective, such as, "did they move from a 'B' to 'C'?"
She said the board has been meeting with the funds to come up with a standard reporting method for their finances, and "once we identify a standard reporting component, then we will lock down on rankings. It's a good year or two off."
Ms. Woods said funds have agreed on a standard method of actuarial reporting, and discussions are now dealing with financial areas such as what constitutes an allowable investment.
"The vast bulk of them are government-backed securities under our current requirements, but [the funds] want us to be a little more lenient," she explained.
According to Ms. Woods, the names of the 12 funds making assessments cannot be revealed because the information is proprietary. However, WorkCompCentral reported the names of two funds==one with deficits, respectively, of $2.8 million and $15.3 million.
According to Ms. Woods, most of the funds instituting assessments did so voluntarily, and there are "only a handful that we have mandated."
© 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.