View this article online: https://www.insurancejournal.com/news/west/2010/05/04/109542.htm
California’s Department of Industrial Relations (DIR) has appointed Bickmore Risk Services and Consulting as conservator for the Contractor’s Access Program of California (CAP), which is a self-insured group that has insufficient deposits to cover estimated future liabilities. The conservator has been selected to manage the group’s financial affairs, including claims disbursement and other payables due.
“Today I assigned a conservator to step in and determine what options CAP has at this time to correct its financial shortfall,” said DIR Director John Duncan. “This is a deliberate course of action as set forth in regulations.”
This self insured group of construction contractors is in an industry that has experienced as much as a 70 percent decrease in payroll reported by insurance brokers.
“Upon our request, the group’s administrator submitted a deficit plan last fall to correct the 2008 insufficiency,” said OSIP Chief James Ware. “It became clear this February that the group’s members could not meet the requirements of the plan, and an additional deficit was reported for 2009.”
Regulations for SIGs in California require that a deposit filed with OSIP cover 135 percent of estimated future liabilities. All groups are re-assessed to determine the estimated future liabilities, based on the group’s annual report of claims received on March 1 each year. Any increase of additional monies due to meet the 135 percent is due by May 1st. CAP’s deposit is currently at 110 percent of estimated future liabilities.
“California’s regulations for self insured groups are the most stringent in the nation,” said John Duncan. “We are close to stakeholder consensus on further improvements to the regulations which will provide more frequent financial reporting.”
CAP became aware in October that their member base had diminished from 189 at the beginning of 2009 to 137. Its administrator, New York-based Compensation Risk Managers (CRM), voluntarily requested an order of revocation be issued for the group after December 31, when the current self-insured term ended. The revocation was approved by OSIP effective January 1.
Last month, OSIP ordered CAP to provide weekly reports on all assessments received to correct the shortfall as laid out in the deficit plan, and to obtain OSIP’s approval prior to making any payments other than workers’ compensation benefits.
“CAP members requested that a conservator be appointed in order to return the group to full financial solvency or to determine whether liquidation of the group’s liabilities is necessary”, Ware said. “We are confident that Bickmore Risk Services and Consulting has the qualifications and experience required to make these key decisions.”
Bickmore Risk Services and Consulting, headquartered in Sacramento, Calif., is the largest independendent risk consulting firm in the western United States with private sector clients in construction and other industries as well as public sector and consulting clients that include state agencies in California, New York and Arizona. The appointment effectively removes CRM as the administrator.