Report on Self Insurance Groups
such as any loss over the first $500,000. ―Aggregate excess reinsurance‖ is reinsurance where the reinsurer pays liabilities that exceed an aggregate amount for a set of claims, typically based on a policy year. Reinsurance typically has an upper limit beyond which the reinsurer has no further liability, but workers’ compensation reinsurance may be ―statutory,‖ in which case there is no upper limit.
A method of securing the payment of compensation without purchasing conventional workers’ compensation insurance coverage. Prior to the advent of Group Self Insurance, there was only one type of self insurance in California. Since the arrival of Group Self Insurance, the term may be prefaced by the adjectives ―Individual‖ or ―Stand Alone‖ to distinguish the original type of self insurance from Group Self Insurance. Unless otherwise indicated by the context, the unqualified term ―Self Insurance‖ still includes only the historical type of self insurance and not Group Self Insurance. ―Self Insurance‖ is synonymous with Individual Self Insurance and Stand Alone Self Insurance (q.v.). As traditionally used, ―self insurance‖ is not insurance at all but is actually self-funding of liabilities. An employer seeking to satisfy its duty to secure the payment of compensation by means of self-funding must first demonstrate its financial capacity and obtain from the Department of Industrial Relations a certificate of consent to self-insure.
An entity that provides services that are essential to the operation of a SIG.
Typically these include the Group Administrator, the TPA, a medical bill reviewing service, an accountant, an actuary, and one or more insurance brokers. One entity may serve multiple roles unless restricted by law.
Stand Alone Self Insurance
Synonymous with ―Individual
Self Insurance,‖ also
synonymous with ―Self Insurance‖ unless the latter term is used in a context that clearly includes Group Self Insurance. ―Self Insurance‖ in the usual sense is not insurance at all, but rather self-funding of liabilities in a manner that is approved
by the state.
Third-Party Administrator or Third-Party Adjuster.
A TPA performs all or part
of the claims adjusting function for an insurer, a self-insured employer, a JPA, or a SIG. An insurer or self-insured employer may administer its own claims, but a SIG must employ a TPA. California prohibits the Group Administrator from having a financial interest in the TPA.