New York legislators are preparing to inquire about the solvency status of the New York Workers Compensation Security Fund, which, as Insurance Journal reported last week, is nearly broke.
The Assembly committees on insurance and labor have called a joint hearing for today, Feb. 15, at 2 p.m. in Albany.
The fund, which covers claims for insolvent insurers, has about $1 million left, with another $4.5 million in assessments still to be collected this month. But it has about $7.5 million in claims and expenses to pay out this and every month.
Assemblyman Pete Grannis, chair of the insurance committee, and Assemblywoman Susan John, chair of the labor committee, will preside at the hearing. Among the questions they said they want answered is why the legislature was not notified sooner about the financial crunch.
According to the hearing notice, the insurance department first notified the legislature in late January of this year that the WCSF would be bankrupt in a matter of weeks and unable to pay claims as of March 1, 2005. According to the insurance department, without an immediate short-term solution, at least 7,500 claimants, mostly injured workers in need of medical treatment or permanently disabled and dependent on this income to support themselves on a day-to-day basis, will stop receiving their weekly checks by the end of the month.
The hearing will examine the department’s role in overseeing insurer solvency, the liquidation process and its administration of the WCSF as well as actions to ensure no interruptions in claims payments and actions needed to ensure the WCSF’s solvency in the future.
The Pataki Administration has proposed granting the workers’ compensation fund the authority in an emergency to transfer funds from another security fund, the property casualty security fund.
The administration has asked 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.
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