The fund that pays New York injured workers whose workers’ compensation carriers have gone belly up is itself nearly bankrupt, according to state officials.
The New York Workers Compensation Security Fund has about $1 million left, with another $4.5 million in assessments still to be collected this month. The problem is that it has about $7.5 million in claims and expenses to pay out this and every month.
“It’s running short of funds,” confirmed Michael Barry, spokesman for the New York State Insurance Department, whose liquidation bureau administers the backup fund.
Claims due for insureds of two insolvent Pennsylvania-based workers’ comp writers -— Reliance Insurance which went under in 2001 and Legion Insurance which entered liquidation 2003 — have contributed to the difficulties. The workers compensation fund handles the claims for an estimated 7,500 injured workers from across the state.
The fund shortfall is not a surprise to administrators. The Pataki Administration had proposed a measure last legislative session to grant the workers’ compensation fund the authority in an emergency to transfer funds from another security fund, the property casualty security fund, but lawmakers did not go along. In New York, covered claims against insolvent insurers are paid by one of three funds — the Property / Casualty Insurance Security Fund, the Public Motor Vehicle Liability Security Fund and the Workers Compensation Security Fund.
Now, Barry said, the Pataki Administration is going back to the legislature with a request that $50 million be funneled into the workers’ comp pool from the property casualty pool. It is also recommending that the current 1 percent of written premium assessment on workers’ comp carriers be raised to 2 percent to provide additional monies.
It appears that legislative action is the only remedy, as the fund is not authorized to borrow money.
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