Report on Self Insurance Groups
Disclosures to Members
Self insurance group administrators describe varying practices with regard to disclosures to members or prospective members. Rule 15481 requires the disclosure of an actuarial report to the board of trustees and to any member who requests it. CHSWC staff have not located a comparable requirement for disclosure of financial reports to members or prospective members. It appears that a good practice is to disclose these reports to members and prospective members under a nondisclosure agreement that prohibits re-disclosure by the recipient of these confidential reports.
CHWSC recommends that disclosure to members and prospective members and their agents or designated representatives should become mandatory by regulation. Non-disclosure agreements to prohibit distribution of confidential information would be acceptable, but regulations should assure that the non-disclosure agreements do not prevent a member or prospective member from obtaining advice from their own agents, brokers, accountants, attorneys, or other consultants who agree to preserve the confidentiality of the information.
An important reason for disclosure is to reduce potential problems if it becomes necessary to pursue collections actions against members of a SIG in deficit. All collections have inherent difficulties. Referring to the litigation occurring in New York, one group administrator said,
The first thing they forget is that they signed joint and several.‖ Without full disclosures,
members may contend that the financial condition of the SIG was misrepresented to them. Full disclosure to a prospective member, to every member, and to their advisors will both promote member involvement in a group’s affairs and reduce the potential for members to deny liability if collections become necessary.
Beyond the specific disclosures recommended in the previous section, marketing should communicate truthful and meaningful information so employers can make informed choices. SIGs are unfamiliar to most employers, so there is a risk of employers not understanding what they are committing to. Employers are vulnerable to being misled by marketing materials that are inaccurate or materials that are technically accurate but contextually misleading.
CHSWC recommends that the Director exercise jurisdiction over the marketing of SIGs and that, if necessary, the Legislature expressly confer that jurisdiction on the Director.
The Director should enact and enforce regulations requiring that all marketing materials be truthful and accurate and not misleading or deceptive. In designing regulations, the Director may