In 2008 alone, ASIWCF will return $12,041,638 to its member companies through its innovative retrospective return plan...
Since its founding 30 years ago, the Fund has put a whopping $184,205,694 in retro credits back into business, strengthening its members’ bottom lines and Alabama’s economic growth.
Business Council of Alabama
What is a Self-Insured Group?
The exclusive purpose of a Self-Insured Group (SIG) is to provide workers’ compensation under Chapter 8, Section 2 of the California Code of Regulations. A SIG is a 501(C)(6) California non-profit mutual benefit corporation, meaning it is owned by its participating members.
How does a self-insured group work?
Group members pay contributions to the SIG which pays all expenses, provides safety and loss control services, and pays the costs of claims, typically under $500,000, to injured workers. The excess funds are called “surplus” and would ordinarily be an insurance company’s profits. In a SIG, the members own the surplus, which can be used for dividends, rate reductions, or even payment holidays.
What about claims costs over the typical $500,000 threshold?
The SIG purchases excess insurance, which pays for claims that exceed the group’s threshold. This insurance is purchased from a carrier with an AM Best rating of A+.
What is the “Indemnity Agreement?”
The Indemnity Agreement is a joint and several liability agreement allowing members to share assets and liabilities on a pro-rata basis. This is the legal principle that allows companies, not able to fully self-insure, to capitalize on the benefits of those large companies that can. In the event of a worst case scenario, and if there is a deficit, and if an employer's contribution accounts for 2% of the SIG, their share of the liability will be 2%.
The Department of Industrial Relations (DIR) stipulates: “The Group Self-Insurer and each of its Group Members are jointly and severally liable for paying and securing liabilities of the Group Self-insurer and its Group Members for the payment of any and all compensation liability required by Labor Codes Section 3700 to 3705 of any and all employees of any Group Member of the Group Self-Insurer and/or of the Group Self-Insurer itself, providing the compensation liability results from an occurrence with a date of injury during the period of membership in said Group Self-Insurer.”
Who regulates SIGs in California?
The Department of Industrial Relations (DIR) is the governing body for all California SIGs. They require an 80% actuarial competency rate for SIGs, much higher than the 50% competency rate required by the California Department of Insurance for traditional workers’ compensation insurance companies.
What if a member decides to leave the SIG?
A member can leave the SIG with 60 days written notice.
What financial requirements are needed to form a California SIG?
Two or more companies in a common industry are required, by law, to have a combined aggregate net worth of $5 million and average annual consolidation group net income greater than $500,000.