California Workers’ Comp CEO Frank Praised at Departure

By | October 1, 2009

The news that Janet D. Frank was leaving her position as CEO of California’s State Compensation Insurance Fund occurred during a meeting of the board of directors of the California Workers’ Compensation Institute.

It was greeted “with a universal feeling by the board members—I think I can say—of sympathy and regret,” said John Michael Nolan, chief executive officer of the institute.

Frank announced her resignation last week. In an e-mail to employees, Frank said she was leaving her job with SCIF because her mother is seriously ill.
The sentiments of the institute’s board were mirrored by others in the state. They said she came in at a difficult time, and was effective at turning things around.

“She did a big part of what they expected to bring things back on track,” said Clark Payan, chief executive officer of Insurance Brokers and Agents of the West (IBA West).

“What a challenge to come in and manage an organization that had never had an outside person before, and she certainly did a fine job,” added Jerry O’Kane, a consultant and the former chief executive officer of IBA West, who follows the workers’ compensation market in California.

The State Compensation Insurance Fund (SCIF) provides workers’ compensation coverage to companies that otherwise could not afford it, and is thought to currently have about 20% of the market. Last year it collected $1.7 billion in premiums.

Frank was hired to lead SCIF in 2007 in the wake of a conflict-of-interest scandal that led to the resignation of two members of the board of directors and the firing of the previous director, John C. Tudor.

The scandal involved management fees that SCIF had paid out to administrators of employee safety groups that did little work. A subsequent audit found that the fund had paid out $500 million over a period of 10 years, and that half of the money had gone to organizations run by the two board members.

When Frank was hired she was the first chief executive not promoted from within. She was hired away from CNA Financial Corp., the country’s fifth largest insurer, where she was vice president of North American operations.

She came in and immediately hired a chief financial officer and a chief risk officer, as temporary contractors, and launched into a review of the fund’s finances and operations.

Shortly after she was hired, she had to contend with a list of 150 recommendations from the state’s Department of Insurance Commissioner Steve Poizner for improving SCIF, and then to implement new openness requirements that directed the fund to make most of its books publically available and to hold open board meetings.

A recent Wall Street Journal column on management praised Frank and her management, saying she was credited with “repairing the reputation of the state-sponsored workers’ compensation insurer, while improving operations and increasing transparency – all under intense scrutiny from state officials.”

Sources the Insurance Journal spoke with said that Frank and SCIF had two recent notable successes. One was getting SCIF employees from having to take the furloughs required of other state employees to cut state costs, and the other was the lawsuit filed by the state insurance commissioner to block the proposed sale of $1 billion-worth of SCIF assets.

Frank’s resignation is effective October 23. The SCIF board of directors has said it will announce an interim replacement during its meeting on October 21.

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