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Report on Self Insurance Groups

Administration of Insolvency

The Director should have standing arrangements with persons or organizations that can be called upon at short notice to take over as administrators or adjusting agents if it becomes necessary for the Director to replace any SIG administrator or adjusting agent. These arrangements will give OSIP the ability to act quickly without having to begin the contracting process after the need has arisen. This need could arise even in situations that do not constitute insolvencies.

One comment litigation that independently

to CHSWC has pointed out that steps should be taken to manage the inevitable

will arise if examined this

and when there is an insolvency of a SIG.

CHSWC

topic,

so

the

comments

will

be

excerpted

verbatim:

has

not

  • Given that an insolvent group may have [members] in a number of different

counties, the litigation costs may prove considerable unless there is clarification as to how insolvencies are to be administered. There needs to be a clearly articulated judicial process established to oversee delinquency proceedings, including a mandate that any action to enforce a right of equitable contribution of one group member upon others, as well as any other actions against the trustees or group administrators, be filed in the same court as the delinquency proceedings. This would allow for a judicially supervised liquidation of the group and its attendant disputes.‖

The comment refers legislation would be examination.

to Kentucky’s statutes, required in California.

KRS 304.50-135, and suggests that CHSWC recommends this subject for

similar further

Further Study

Too little is known about the actual performance of self insurance groups (SIGs).

Their

supposed benefits are known only congratulatory statements must always

though

anecdote.

While

self-promotional

be taken with skepticism, the Commission on

and self- Health and

Safety and Workers’ Compensation (CHSWC) believes there is truth in the claims that insurance can reduce employer costs and improve worker safety and return to work. potential may not be realized in all groups. To better evaluate and quantify whether

group self The same group self

insurance is living compared to the

up to its potential, performance of

the performance of SIGs conventional insurance.

should The

be objectively studied and Workers’ Compensation

Information System (WCIS) operated by the provide a useful database for research once

Division of participants

Workers’ Compensation (DWC) will fully comply with its data reporting

requirements,

and

OSIP

should

insist

on

compliance

by

all

of

the

entities

under

its

jurisdiction.

28

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