The California Department of Industrial Relations (DIR) announced that it had recently approved a plan allowing some private sector groups to self-insure workers’ compensation liabilities.
California Motor Car Dealers Comp Plan became the first to self-insure in early January. Following are Claridge’s Ltd. of Fremont, Crown Motors of Redding, Pearson Ford Co. of San Diego, and Raceway Ford Inc., of Riverside.
According to DIR Director Stephen J. Smith, expansion is further expected for self-insurers in the automobile industry and onward to other industries.
DIR noted that there are less than one quarter of one percent of California employers that are self-insured for workers’ comp liabilities. The primarily large employers disburse about a third of all workers’ comp benefits in the state yearly.
DIR further stated that qualifications for self-insurance within the state require private sector groups to provide a comprehensive feasibility study. Additionally, the company must have a minimum of $5 million of qualifying net worth and belong to the same type of industry. The group also must charge sufficient premiums, carry particular excess insurance for catastrophic losses, actuarially project losses, consent to joint and several liability of all losses and be governed by a board of trustees.
Additional requirements include a state requisite for all workers’ comp self-insurers to post a security deposit, file reports of liabilities yearly, and pay assessments and fees.
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