Workers’ compensation insurers in New York can cease making payments into the state’s security fund for that coverage, now that the fund has amassed at least $74 million in assets, the Insurance Department said.
By statute, the department can suspend the requirement that insurers pay into the fund once it has reached that minimum threshold. However, if assets fall below that level in the future, payments will once again be required.
The fund is meant to guarantee claims to injured workers in the even of an insurer’s insolvency. Normally insurers pay up to 2 percent of their net written premiums each quarter into the fund
The suspension of payments affects insurers’ contributions for the first quarter of 2008, which would normally be due by May 15.
The self-sufficient status of the fund is a far cry from where it stood barely three years ago, as regulators, lawmakers and insurers scrambled to ensure its solvency.
In February 2005, the security fund had about $1 million in assets but $7.5 million in claims and expenses, and was paying claims to more than 7,500 claimants.
As part of a legislative package to ensure its solvency, insurers’ payments into the fund were doubled.
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