View this article online: https://www.insurancejournal.com/news/west/2010/11/19/115056.htm
The Contractors Access Program of California (CAP), a self insured group, has been declared in default due to insufficient funding required for continued operation, California’s Department of Industrial Relations (DIR) Director John C. Duncan announced.
Duncan said the default was declared after remedial action was taken and CAP failed to correct deficits to meet their obligations as a self-insured group. California regulations require self-insurance groups to have deposits cover 135 percent of estimated future liabilities. The responsibility of benefit payments for injured workers has been transfered to the Self-Insurers’ Security Fund.
“I take this necessary step to protect injured workers employed by CAP and to ensure that they will not suffer an interruption in their workers’ compensation claim payments,” Duncan said. “The seriousness of declaring a default of CAP brings burdens to members of the group which will be addressed fairly and equitably.”
The default means that the Self-Insurers’ Security Fund (SISF) is now responsible to ensure timely payment of workers’ compensation benefits to injured workers covered by the group. The group’s security deposit as well as their surety bond will be transferred to SISF, which will immediately assume responsibilities of administering the claims.
The Self-Insurers’ Security Fund, established by the legislature, is responsible for managing the collective liabilities of workers’ compensation claims arising when private self-insured employers or groups become insolvent.
In April, DIR’s Office of Self Insurance Plans had requested that CAP file weekly reports on all assessments receive to correct a shortfall, and in May assigned the conservator Bickmore Risk Service and Consulting to manage the group’s financial affairs, including claims disbursement and other payables due. The CAP administrator prior to the conservatorship was New York-based Compensation Risk Managers (CRM).
“All self insured groups in California must justify their financial viability,” said Self Insurance Plans Manager James A. Ware. “We have ordered a thorough review of all SIGs in California with funding of less than 100 percent, and continue to monitor their fiscal standing.”