Self-insured employers
To become self-insured, an employer must meet specific financial criteria and must obtain excess workers’ compensation insurance from an authorized company. This excess insurance protects the self-insured employer in the event of a catastrophic claim. The self-insured employer must also have deposits with the Workers’ Compensation Division. These deposits protect injured employees in the event of the employer’s bankruptcy.
Self-insured employer groups
Employers can form into self-insured employer groups if the employers in the group are members of an organization; the employers in the group constitute at least 50 percent of the employers in the organization (unless the number of covered workers in the group exceeds 500, in which case the employers in the group must constitute at least 25 percent of the employers in the organization); and the grouping of employers is likely to improve accident prevention, claims handling for the employers, and reduce expenses. Employers that are members of the group are jointly liable for one another’s workers’ compensation claims. Self-insured groups must also provide surety bonds or letters of credit to the department to securitize their claim liabilities.
In 2010, there were seven self-insured employer groups. In early 2011, one self-insured employer group filed for bankruptcy, the first time a group had become insolvent. Another group decertified in 2012, and the department came close to decertifying an additional group in 2013. As a result of these issues, the Legislature enacted Senate Bill 1558 (2014). The legislation created a number of reforms. It required that the group members vote by July 1, 2014, to remain a group. The groups that voted to dissolve or were already out of operation are allowed use of Workers’ Benefit Fund monies to pay claim costs. The legislation also gave the director more authority over these decertified groups. The three groups in financial trouble were decertified under the provisions of this legislation.
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