The board of directors of California’s State Compensation Insurance Fund (SCIF) appointed Doug Stewart, chief risk officer, as president and CEO on an interim basis, replacing outgoing CEO Janet D. Frank.
“The board is very confident that Doug Stewart will provide solid leadership and a steady hand during this transition period,” said Jeanne Cain, the chair of the board of directors. “As chief risk officer for the past two years, Doug has played a significant role in State Fund’s transformation and well understands our commitment to ensuring that State Fund remains a stable provider of workers’ compensation insurance and a vital asset to the state’s economy.
The news that Frank was leaving her position as CEO of SCIF occurred during a meeting of the board of directors of the California Workers’ Compensation Institute in early October.
It was greeted “with a universal feeling by the board members – I think I can say – of sympathy and regret,” said John Michael Nolan, CEO of the Institute.
Frank said she was leaving her job with SCIF because her mother is seriously ill.
The sentiments of the institute’s board were mirrored by others in the state. They said she came in at a difficult time, and was effective at turning things around.
“She did a big part of what they expected to bring things back on track,” said Clark Payan, CEO of Insurance Brokers and Agents of the West (IBA West).
“What a challenge to come in and manage an organization that had never had an outside person before, and she certainly did a fine job,” added Jerry O’Kane, a consultant and the former CEO of IBA West, who follows the workers’ compensation market in California.
SCIF provides workers’ comp coverage to companies that otherwise could not afford it, and is thought to currently have about 20 percent of the market. Last year it collected $1.7 billion in premiums.
Frank was hired to lead SCIF in 2007 in the wake of a conflict-of-interest scandal that led to the resignation of two members of the board of directors and the firing of the previous director, John C. Tudor.
The scandal involved management fees that SCIF had paid out to administrators of employee safety groups that did little work. A subsequent audit found that the fund had paid out $500 million during a period of 10 years, and that half of the money had gone to organizations run by the two board members.
When Frank was hired she was the first CEO not promoted from within. She was hired away from CNA Financial Corp., the country’s fifth largest insurer, where she was vice president of North American operations.
She came in and immediately hired a chief financial officer and a chief risk officer, as temporary contractors, and launched into a review of the fund’s finances and operations.
Shortly after, she contended with a list of 150 recommendations from the state’s Department of Insurance Commissioner Steve Poizner for improving SCIF, and then to implement new openness requirements that directed the Fund to make most of its books publically available and to hold open board meetings.
Sources the Insurance Journal spoke with said that Frank and SCIF had two recent notable successes. One was getting SCIF employees from having to take the furloughs required of other state employees to cut state costs, and the other was the lawsuit filed by the state insurance commissioner to block the proposed sale of $1 billion-worth of SCIF assets.
“Despite the significant economic challenges facing California, State Fund remains financially strong and poised to continue providing a guaranteed workers’ compensation market to California’s businesses. Doug Stewart is ideally suited to ensure we remain on course,” Cain added.
Stewart joined State Fund in a consulting capacity in November 2007 and was named chief risk officer following passage of Senate Bill 1145. He brings more than 35 years experience in the insurance industry in the areas of claims, underwriting, marketing, sales, USL&H and risk management.
The board will begin a national search for a permanent president and CEO immediately.
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