The New York State Workers’ Compensation Board has issued a new report that calls on lawmakers to make “sweeping changes” in the way self-insured claims are secured in the Empire State.
The report recommends replacing the current approach to self-insurance, where employers post a security deposit equivalent to their outstanding workers’ compensation claims, with a guarantee pool, where payments into the pool are based on credit rating and the actual risk an employer brings to the pool.
The pool system would pay claims in the event any self-insured employers default on their workers’ compensation obligations. Changing to the pool model would result in the release of the nearly $2 billion in letters of credit and surety bonds back to the state’s active individual self-insured employers, the board said.
The board was asked to examine the self-insurance system as part of a package of workers compensation reforms enacted early last year.
Board Chair Zachary S. Weiss said switching to the pool will reduce the risk of insolvencies and eliminate the security most employers must post to be authorized as an active self-insurer in New York State.
Source: New York State Workers’ Compensation Board
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