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Self-Insured Groups: A Country of Their Own?

September 23rd, 2013

Here at the humble blogger institute, the humble voices inside your humble blogger’s head try to humbly keep our beloved readers up to date on the latest legislative developments.   How, of for all you small businesses out there, the ones who watch the dealings of the G-ds moving legislation this way and that, you may want to keep an eye on a certain bill: Senate Bill 487, introduced by Senator Ron Calderon.

The issue came up at the recent California Self-Insured Association Conference in Walnut Creek (thanks to my beloved readers who stopped by to say hello).  During the presentation by Jon Wroten, Chief of the Office of Self-Insurance Plans, when he discussed the benefits of the Alternative Security Program, which allows larger self-insured employers to retrieve their security deposits for use in operating funds.  Here’s the catch: smaller self-insured employers and self-insured groups are not welcome at the ASP party, and the cold shoulder is truly felt when those smaller self-insured employers and groups have to compete with the big-boys for low prices.

The concern, generally, is that self-insured groups can collapse much faster than large, self-insured employers, and thereby shift liability to all the other members of the Self-Insured Security Fund.  Also, with so many small members and a constantly changing membership, it’s hard to tell just how much the group could pony up in a pinch through the assets of its members.  So, what’s the solution?  I think Mr. Bender put it best:

SB-487 would allow self-insured groups to set up their own security fund, which would not burden the big-boy self-insurers with group defaults, and would also help the groups avoid forking over cash when Safeway and Grimway Farms go belly up (I wouldn’t sell your stock just yet… your humble blogger is just providing an example).

The bill was introduced in February of 2013, and appears to have gone no-where yet.  The bill itself would directly create a Self-Insured Group Security Fund, but rather declare that it “is the intent of the Legislature to enact legislation to establish a Self-Insured Group Security Fund for purposes of workers’ compensation insurance.”  If passed, it would basically be a pre-engagement (“will you someday intend to marry me?”)

Let’s keep an eye on this one, and if you’re an employer who would like to a bit more bite in your self-insured group, maybe you ought to give your elected representative a call on this one too.

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