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California Workers Comp Self Insured Mess

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Self Insured Mess Of California

The California Workers Comp self insured situation should be considered a total mess.  I was reading an article at www.wcexec.com on the recent collapse The Contractors Access Program of California (CAP), a self insured group of contractors, is scheduled to be seized by California’s Office of Self Insurance Plans.

Graphic Of Small Plant Grow in a Cut Tree self insured Mess
123RF

The complicating factor is that members of self insured groups are jointly and severally liable for each other’s claims and for the claims of the group. The 200 plus mostly small employers in this group will be liable for a reserves shortfall through a special assessment of the members for as much as $12M to $60M. Past members are on the hook for the years during which they participated. I find it fascinating that members that are now not participating can be assessed.

Liberty had held the bond, but cancelled it earlier this year. There is a $15.7 million bond in place for the prior years. The bond figure would only cover a small portion when compared to the size of the self insurance group and the liabilities in place.

Picture Of People Self Insured Looking Up
StockUnlimited

Not to throw salt in the wound, but agents that recommended participation in the group can also be liable? It was noted that the agents’ E&O excludes self insurance plan recommendations for their clients. I do not think that blaming agents in necessarily a great thing.

I have received the question very often – why do I mention a state on the west coast when we are on the east coast – what happens elsewhere may not apply to me. As I have said often, what happens in a certain state, especially CA, will be coming to state near you. For example, in our home state of North Carolina, there was a similar situation with a company called GRIT (Government Reinsurance Insurance Trust). They went under and the governmental entities were stuck with their own claims. One of my good friends working for a certain carrier said boxes and boxes of files were brought in by a semi truck to their offices when they agreed to handle them.

Everything in insurance repeats itself over and over, with a slight twist.

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James Moore

Raleigh, NC, United States

About The Author...

James founded a Workers’ Compensation consulting firm, J&L Risk Mgmt Consultants, Inc. in 1996. J&L’s mission is to reduce our clients’ Workers Compensation premiums by using time-tested techniques. J&L’s claims, premium, reserve and Experience Mod reviews have saved employers over $9.8 million in earned premiums over the last three years. J&L has saved numerous companies from bankruptcy proceedings as a result of insurance overpayments.

James has over 27 years of experience in insurance claims, audit, and underwriting, specializing in Workers’ Compensation. He has supervised, and managed the administration of Workers’ Compensation claims, and underwriting in over 45 states. His professional experience includes being the Director of Risk Management for the North Carolina School Boards Association. He created a very successful Workers’ Compensation Injury Rehabilitation Unit for school personnel.

James’s educational background, which centered on computer technology, culminated in earning a Masters of Business Administration (MBA); an Associate in Claims designation (AIC); and an Associate in Risk Management designation (ARM). He is a Chartered Financial Consultant (ChFC) and a licensed financial advisor. The NC Department of Insurance has certified him as an insurance instructor. He also possesses a Bachelors’ Degree in Actuarial Science.

LexisNexis has twice recognized his blog as one of the Top 25 Blogs on Workers’ Compensation. J&L has been listed in AM Best’s Preferred Providers Directory for Insurance Experts – Workers Compensation for over eight years. He recently won the prestigious Baucom Shine Lifetime Achievement Award for his volunteer contributions to the area of risk management and safety. James was recently named as an instructor for the prestigious Insurance Academy.

James is on the Board of Directors and Treasurer of the North Carolina Mid-State Safety Council. He has published two manuals on Workers’ Compensation and three different claims processing manuals. He has also written and has been quoted in numerous articles on reducing Workers’ Compensation costs for public and private employers. James publishes a weekly newsletter with 7,000 readers.

He currently possess press credentials and am invited to various national Workers Compensation conferences as a reporter.

James’s articles or interviews on Workers’ Compensation have appeared in the following publications or websites:

  • Risk and Insurance Management Society (RIMS)
  • Entrepreneur Magazine
  • Bloomberg Business News
  • WorkCompCentral.com
  • Claims Magazine
  • Risk & Insurance Magazine
  • Insurance Journal
  • Workers Compensation.com
  • LinkedIn, Twitter, Facebook and other social media sites
  • Various trade publications

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