The state would be crazy to sell it, first it is the insurer of last resort, it makes a profit and put it right back into the system, with a private company running it they could and would up the costs to everyone, it is a mess now, just think what a mess it would be as a for profit company. I think we need a recall!!!!!
$3.3B–>$14+B deficits for 08 & 09 require drastic measures. Certainly puts the multi-billion dollar quarterly losses of the banks which have become part of the daily news cycle in perspective, doesn’t it?
This inept organization will only be run right if shareholders keep an eye on it. The inefficiency is typical of a government run organization. Hopefully this will be a trend to start selling of government entities that can be run by the private sector, including the post office. While we will not only get better managed organizations, it will help boost the economy.
InsureExec … AMEN !! I couldn’t agree with you more. Of course, I can think of lots of things to cut to bring the budget more in line, but that’s not politically correct.
You folks have short memories! During the last hard market, SCIF was nearly the only insuror providing coverage to those who couldn’t afford to self-insure. If SCIF is sold, the insuror of last resort will surely go away and then California will either have to go to an assigned risk plan or the last hard market will look like a dream compared to any that are sure to come in the future. A better solution to fixing the state budget is to solve their illegal alien problem. Arnold should take a drive down Sunset Blvd in Silver Lake to see what everyone else already knows!
A little longer term memory and you will recall the State Fund’s premiums were the most competitive in the market and they were paying 18% commission, so agents moved a ton of business to them. While other carriers had signficantly reduced revenue as they could no longer compete when the DOI capped schedule credit at 25%. As long as the DOI keeps the market from getting out of control like it did before we won’t have a repeat of the last hard market. Selling SCIF is long overdue and now is the time to do it as business has been moving back to the private sector to get away from the nightmares the SCIF enjoys creating. Two things the new owner will need to do is eliminate the state retirement plan and the state agency workplace mentality which go hand in hand, and bring in people who know how to underwrite. With a Open rating market we don’t need an assigned risk pool. Why does the State need to subside businesses that are not concerned with creating a safe work environment? Not being able to obtain WC insurance is a great incentive to make sure worker safety is a priority. By the way where is all that investment income SCIF(a non-profit corp.)stopped giving back to their policyholders in the form of dividends?
Correction to that. Toward the end of the last SOFT market, SCIF became the cheapest on the street with the highest commissions, forcing any carrier stupid enough to followed to lose mucho money. If it were not for the reform, this entity would be extremely broke and the state would be pumping billion$ into it instead of thinking they can get billions selling it.
I think only a company not quite right in the head would want to purchase SCIF. The retirement plan is unfunded (public entities don’t need to account for it), the employees are state “workers” and union. The structure is a mess and it would take hundreds of millions of dollars after the purchase, to make it into a real insurance company. I think the state should mandate that SCIF set up a 5 year plan to slowly reduce premium until it is no more. (Or simply become a market of last resort with very high rates and no flexibility to reduce them. This would give the market time to adjust and stop the headaches the state now has with this monstrocity.
to sellit asap,
first of all i don’t think you know what you are talking about. SCIF doesn’t have a choice of who they insure, they have to take anyone that comes in their door with few exceptions. Are you willing to take on that type of risk? Second, SCIF employees are not your typical state employees and get paid a lot less than your average do nothing brokers, who sit back and let scif do the work for them. If brokers and agents would service their accounts placed with scif as they are required to do based on the broker agreement things may go a lot smoother. How many carriers out there give comissions to their agents for placing garbage accounts with them?
Hey Jimbo if you worked for a private WC carrier like Zenith you would understand there are major differences on how to handle WC insurance. SCIF does do a good job of brainwashing. Prior to you joining, your employer SCIF lost so much business in the early stages of open rating that they had to put on a hiring freeze and offered early retirement to cut expenses. When businesses have a choice it’s not the SCIF that they pick.
Sorry, but what you get paid has nothing to do with having a state worker attitude. Let me ask you a question, If SCIF wanted brokers to help them why doesn’t SCIF provide their policyholders with a copy of their ex mod worksheets automatically and encourage them to review them for accuracy? Brokers have to request it because SCIF does not want policyholders to question what they do as they will find they make coding mistakes, they overstate reserves, and purposely do this to obtain more premium. Is this how a State Agnecy should operate, purposely trying to make customers may more premiums? Placing business with SCIF is a last resort because of the way you do business which requires broker to do more work trying to fix the problems you created, and prevent their errors. It actually creates more work for brokers to place business with State Fund. By the way the SCIF efforts to keep ex mods higher by miscoding claims and over stating reserves helps to make the ex mod higher (and when they get it over 1.25%) they help to fund another state agency sister CAL OSHA. One state agency helping another! Claims case loads over 250 per examiner does not allow much opportunity for managing the claim aggressily or accurately. When is the last time they offered to do surveilance? Hey Jimbo think of it this way, if they sell it you mostly likely will have the opportunity to discover how real insurance companies operate and the difference will rock your world. One last question why does SCIF use the same loss run format that they have used since the 70’s, when they could update and supply so much more information about the claim to their customers? Now you know why the legistature is expanding their BOD and taking control of this company. Sell it now while we can get some money to pay down our debt.
Making a profit? Who are you kidding. The SCIF was writing about 60% of the business in the State a few years ago because they were significantly underpricing it and other carriers would not touch it for the prices they were offering.
There is a reason SCIF withdrew from the ratings like AM Best a few years ago. Because they were technically insolvant. Their liabilities exceeded their assets. They have been fighting to stay ahead of their claims tail for years, and only did it by increasing the amount of premium they were bringing in.
Now that their premiums have dropped, the tail will catch them. My prediction is that in 2 years or less the SCIF will be insolvant and the State will be trying to assess all the carriers operating in the State to prop it up. The next insurance hard market cycle will start with the collapse of the SCIF. This will bring several other carriers down with it.
There is no way they could sell them. They would probably have to pay someone to take them because their liabilities are greater than their assets. Why would anyone pay for a book of business that they are cherry-picking now anyway?
AM Best was aware of the CA marketplace in the early years of WC open rating and they were looking very cautiously at all carriers writing CA Work Comp. One reason the SCIF was downgraded was their premium fluctation. They operated for years without a rating so why did they need it. When SCIF management told the commissioner they would not let him look into their operations he sued and as SCIF does routinely they appeal every decision against them until they win or exhaust all avenues. Never at any time were they close to being involvent, that was pure politics pushing that idea, nor will it happen in the future. Their pricing is higher than the market and their loss ratios are better than expected. The previous hard market was caused by judges ignoring the WC reforms of 1992 and awarding huge PD awards based upon the opinions of doctors who made their money from the attorneys who referred business to them in exchange for high PD reports. The 2004 WC reforms stopped this practice and PD awards have been sharply reduced which in turn caused WC premiums to plummet. The Applicant’s attorneys now have Sen. Don Perata in their hip pocket and he is trying to help them get their old system back. The latest scheme is to add sleep disorder, sexual dysfunction, and psych to their claims to get more money. The next hard market will come when CA elects a Democrat as governor then the party will gain full control as they have both houses of the legislature. Then they will undo all the WC reforms of 2004 and all the carriers will flee the market leaving only the SCIF. Without SCIF to fall back on, they may have to try to come up with a fair system for the good of the citizens of California who elected them for a change instead of the special interest groups. That won’t happen and neither will selling the State Fund because of politics, pure and simple.
The state would be crazy to sell it, first it is the insurer of last resort, it makes a profit and put it right back into the system, with a private company running it they could and would up the costs to everyone, it is a mess now, just think what a mess it would be as a for profit company. I think we need a recall!!!!!
Snip snip that budget, Arnold!
$3.3B–>$14+B deficits for 08 & 09 require drastic measures. Certainly puts the multi-billion dollar quarterly losses of the banks which have become part of the daily news cycle in perspective, doesn’t it?
This inept organization will only be run right if shareholders keep an eye on it. The inefficiency is typical of a government run organization. Hopefully this will be a trend to start selling of government entities that can be run by the private sector, including the post office. While we will not only get better managed organizations, it will help boost the economy.
InsureExec … AMEN !! I couldn’t agree with you more. Of course, I can think of lots of things to cut to bring the budget more in line, but that’s not politically correct.
You folks have short memories! During the last hard market, SCIF was nearly the only insuror providing coverage to those who couldn’t afford to self-insure. If SCIF is sold, the insuror of last resort will surely go away and then California will either have to go to an assigned risk plan or the last hard market will look like a dream compared to any that are sure to come in the future. A better solution to fixing the state budget is to solve their illegal alien problem. Arnold should take a drive down Sunset Blvd in Silver Lake to see what everyone else already knows!
A little longer term memory and you will recall the State Fund’s premiums were the most competitive in the market and they were paying 18% commission, so agents moved a ton of business to them. While other carriers had signficantly reduced revenue as they could no longer compete when the DOI capped schedule credit at 25%. As long as the DOI keeps the market from getting out of control like it did before we won’t have a repeat of the last hard market. Selling SCIF is long overdue and now is the time to do it as business has been moving back to the private sector to get away from the nightmares the SCIF enjoys creating. Two things the new owner will need to do is eliminate the state retirement plan and the state agency workplace mentality which go hand in hand, and bring in people who know how to underwrite. With a Open rating market we don’t need an assigned risk pool. Why does the State need to subside businesses that are not concerned with creating a safe work environment? Not being able to obtain WC insurance is a great incentive to make sure worker safety is a priority. By the way where is all that investment income SCIF(a non-profit corp.)stopped giving back to their policyholders in the form of dividends?
Correction to that. Toward the end of the last SOFT market, SCIF became the cheapest on the street with the highest commissions, forcing any carrier stupid enough to followed to lose mucho money. If it were not for the reform, this entity would be extremely broke and the state would be pumping billion$ into it instead of thinking they can get billions selling it.
I think only a company not quite right in the head would want to purchase SCIF. The retirement plan is unfunded (public entities don’t need to account for it), the employees are state “workers” and union. The structure is a mess and it would take hundreds of millions of dollars after the purchase, to make it into a real insurance company. I think the state should mandate that SCIF set up a 5 year plan to slowly reduce premium until it is no more. (Or simply become a market of last resort with very high rates and no flexibility to reduce them. This would give the market time to adjust and stop the headaches the state now has with this monstrocity.
…so you and all your policy holders are willing to pay yet another surcharge to support another entity like CIGA or UEF to cover the residual market.
to sellit asap,
first of all i don’t think you know what you are talking about. SCIF doesn’t have a choice of who they insure, they have to take anyone that comes in their door with few exceptions. Are you willing to take on that type of risk? Second, SCIF employees are not your typical state employees and get paid a lot less than your average do nothing brokers, who sit back and let scif do the work for them. If brokers and agents would service their accounts placed with scif as they are required to do based on the broker agreement things may go a lot smoother. How many carriers out there give comissions to their agents for placing garbage accounts with them?
Hey Jimbo if you worked for a private WC carrier like Zenith you would understand there are major differences on how to handle WC insurance. SCIF does do a good job of brainwashing. Prior to you joining, your employer SCIF lost so much business in the early stages of open rating that they had to put on a hiring freeze and offered early retirement to cut expenses. When businesses have a choice it’s not the SCIF that they pick.
Sorry, but what you get paid has nothing to do with having a state worker attitude. Let me ask you a question, If SCIF wanted brokers to help them why doesn’t SCIF provide their policyholders with a copy of their ex mod worksheets automatically and encourage them to review them for accuracy? Brokers have to request it because SCIF does not want policyholders to question what they do as they will find they make coding mistakes, they overstate reserves, and purposely do this to obtain more premium. Is this how a State Agnecy should operate, purposely trying to make customers may more premiums? Placing business with SCIF is a last resort because of the way you do business which requires broker to do more work trying to fix the problems you created, and prevent their errors. It actually creates more work for brokers to place business with State Fund. By the way the SCIF efforts to keep ex mods higher by miscoding claims and over stating reserves helps to make the ex mod higher (and when they get it over 1.25%) they help to fund another state agency sister CAL OSHA. One state agency helping another! Claims case loads over 250 per examiner does not allow much opportunity for managing the claim aggressily or accurately. When is the last time they offered to do surveilance? Hey Jimbo think of it this way, if they sell it you mostly likely will have the opportunity to discover how real insurance companies operate and the difference will rock your world. One last question why does SCIF use the same loss run format that they have used since the 70’s, when they could update and supply so much more information about the claim to their customers? Now you know why the legistature is expanding their BOD and taking control of this company. Sell it now while we can get some money to pay down our debt.
Making a profit? Who are you kidding. The SCIF was writing about 60% of the business in the State a few years ago because they were significantly underpricing it and other carriers would not touch it for the prices they were offering.
There is a reason SCIF withdrew from the ratings like AM Best a few years ago. Because they were technically insolvant. Their liabilities exceeded their assets. They have been fighting to stay ahead of their claims tail for years, and only did it by increasing the amount of premium they were bringing in.
Now that their premiums have dropped, the tail will catch them. My prediction is that in 2 years or less the SCIF will be insolvant and the State will be trying to assess all the carriers operating in the State to prop it up. The next insurance hard market cycle will start with the collapse of the SCIF. This will bring several other carriers down with it.
There is no way they could sell them. They would probably have to pay someone to take them because their liabilities are greater than their assets. Why would anyone pay for a book of business that they are cherry-picking now anyway?
AM Best was aware of the CA marketplace in the early years of WC open rating and they were looking very cautiously at all carriers writing CA Work Comp. One reason the SCIF was downgraded was their premium fluctation. They operated for years without a rating so why did they need it. When SCIF management told the commissioner they would not let him look into their operations he sued and as SCIF does routinely they appeal every decision against them until they win or exhaust all avenues. Never at any time were they close to being involvent, that was pure politics pushing that idea, nor will it happen in the future. Their pricing is higher than the market and their loss ratios are better than expected. The previous hard market was caused by judges ignoring the WC reforms of 1992 and awarding huge PD awards based upon the opinions of doctors who made their money from the attorneys who referred business to them in exchange for high PD reports. The 2004 WC reforms stopped this practice and PD awards have been sharply reduced which in turn caused WC premiums to plummet. The Applicant’s attorneys now have Sen. Don Perata in their hip pocket and he is trying to help them get their old system back. The latest scheme is to add sleep disorder, sexual dysfunction, and psych to their claims to get more money. The next hard market will come when CA elects a Democrat as governor then the party will gain full control as they have both houses of the legislature. Then they will undo all the WC reforms of 2004 and all the carriers will flee the market leaving only the SCIF. Without SCIF to fall back on, they may have to try to come up with a fair system for the good of the citizens of California who elected them for a change instead of the special interest groups. That won’t happen and neither will selling the State Fund because of politics, pure and simple.