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Legislative Memo

BILL:

S.5612 (Winner)/A. 8713 (Rules, Request of Farrell)

  Support

SUBJECT:

Payment of Workers' Compensation Assessments by Group Self-Insurers

 

DATE:

June 21, 2006

 

The Business Council of New York State, Inc. strongly supports the above captioned legislation which would change the method of payment, but not the amount of payment, of the workers' compensation assessments for special funds made by group self-insurers.

The change of payment from an indemnity loss basis to a premium basis was authorized by the legislature in 1999. This change was made in response to a new accounting standard issued by the Financial Accounting Standards Board. This legislation would provide parity for group self-insurers.

The change in assessment payment methodology will provide more price stability to the workers' compensation programs offered by group self-insurers. Under this legislation, group self-insurers, would pay their workers' compensation assessment for special funds through a surcharge based on premium in accordance with rules set forth by the New York compensation insurance rating board.

The programs offered by group self-insurers are regulated by the New York State workers' Compensation Board. The regulations governing self-insured trusts (12 NYCRR 317) are extensive and provide authority to the Chair of the workers' Compensation to intervene if appropriate reserves levels are not maintained or insufficient rates charged.

There are numerous workers' compensation special funds which are paid through assessments allocated to commercial carriers, self insurers (including group self insurers), the State Insurance Fund and political subdivisions. The method for allocating assessments among the various types of insurers is set by statute and would not be altered by this legislation. The various classes of insurers would continue to have their allocations determined on the basis of their percentage of total indemnity payments made in the preceding year.

This legislation would provide for a separate calculation for the allocation amount apportioned to group self-insurers. This amount would be further apportioned and a specific dollar assessment levied upon individual group insurers who would then surcharge the premiums of the participants of their trust.