Self Insurance Plans (SIP)
Self Insurance Plans (SIP), a program within the director's office of the Department of Industrial Relations (DIR), authorizes qualified employers to provide their own coverage for workers' compensation liabilities. The director of Industrial Relations is responsible for certification of public and private self insured employers, third-party administrative agencies that oversee self insurance programs, and individual claims adjusters. Self insurers are required to post a security deposit -- adjusted annually to cover liabilities incurred -- and to submit to SIP audits. For more information or comments on self insurance, please e-mail us at SIP@dir.ca.gov.
INSTEC Notes Deal With Compensation Risk Managers
Commercial P/C software provider, INSTEC, announced an agreement with Compensation Risk Managers, LLC. (CRM) for the implementation of the QuickSolver® Workers' Compensation policy rating and administration solution. The solution will also feature an on-line interface between the INSTEC software and their agency management system.
According to Eric Egeland, vice president of Specialty Risk, with CRM, "When looking for insurance software there seems to be two major classes available... the Honda Civic that inexpensively gets you where you need to go and little else, and the space shuttle that costs a billion dollars and you have to spend an additional million to learn how to use it properly. INSTEC, however, offers something truly unique - a robust and comprehensible solution at a reasonable cost. As a growing Administrator with plans to directly write multi-line/multi-state programs, CRM (www.trustcrm.com) needed a rating and policy issuance system that was straight forward enough to actually make rating easier, yet was still robust and customizable for our future needs. INSTEC fit those needs and most important of all... our entire management staff deemed the QuickSolver system to be the most user-friendly and intuitive of a half dozen other systems."
Pat Walsh, INSTEC vice president, added, "As a growing company, CRM has recognized the value of investing in a solid infrastructure which will enable them to grow their business and expand upon their product and service offerings. We appreciate their confidence in INSTEC (www.instec-corp.com) and in our ability to provide comprehensive and cost-effective solutions that they can build their business on."
Workers' comp surplus Premiums still might not be cut
California's dominant workers' compensation insurer reported Wednesday that its financial surplus grew by 37 percent last year, but that might not be enough to let it to make deeper cuts in the premiums it charges businesses.
San Francisco's State Compensation Insurance Fund said it ended 2004 with a surplus of $2.86 billion and collected $7.9 billion in premiums.
The ratio of surplus to premiums has been a contentious issue because it affects the premiums paid by the 260,000 businesses that are insured by State Fund.
The need to rebuild its surplus has restricted State Fund's ability to aggressively pass on the savings that insurance carriers have enjoyed thanks to a series of legislative changes designed to curb the system's medical costs and disability payments.
California Insurance Commissioner John Garamendi has insisted that State Fund -- a quasi-public firm that serves as insurer of last resort -- should meet the same surplus requirements as private carriers.
State Fund spokesman Jim Zelinski said his organization would have needed a surplus of $3.4 billion to have met that requirement at the end of 2004. He said State Fund now expects meet its surplus goal by the middle of this year.
The roots of the surplus issue go back to the period between 1999 and 2001, when more than two dozen private workers' comp insurers either went bankrupt or left California, victims of a price war that occurred after workers' comp premiums were deregulated in the mid-1990s.
Businesses with nowhere else to turn flocked to State Fund, which absorbed billions of dollars of premium risk in a very short time, creating the surplus problem.
Now State Fund, which has about 60 percent of the business in California, is trying to reduce its market share, lower its premiums and rebuild its surplus. Jeanne Cain, who chairs the board that oversees State Fund, noted that the state-chartered insurer has reduced premiums 14.9 percent since January 2004.
Cain said she expects premiums to continue to drop as legislative changes reduce the cost of covering on-the-job injuries. But she couldn't say how much. "We probably won't know until the next rate filing in July,'' she said.
Garamendi spokesman Norman Williams said Wednesday's financial report definitely shows improvement but added that State Fund still needs to improve its operations so it can continue to rebuild its surplus while reducing its premiums.
In recent months, Gov. Arnold Schwarzenegger has quietly undertaken an overhaul of State Fund, appointing three new voting members to its five-person governing board. In February, State Fund President Dianne Oki announced her retirement. Executive Vice President James Tudor was named acting president while the board searches for a permanent replacement.
As for business owners who may only want to know how much they can expect rates to drop, San Francisco insurance broker and small-business advocate Scott Hauge said rates are already dropping for the least-risky occupations.
"Things are definitely moving in the right direction,'' he said.
E-mail Tom Abate at email@example.com.