Initial Statement of Reasons
Title 8, Chapter 8, Group 2
Article 9, Section 15402.l
Interim Annual Reports
Self Insurance Plans requires all self insurers to submit an Interim Self Insurers Annual Report when there is a change in administration of their worker's compensation liability claims. One of the situations that requires this interim report to be prepared is when a self insurer completely leaves self insurance and fully insures their workers compensation liabilities with an insurance policy from an admitted carrier. This interim annual report no longer required in practice, but it is still required in the regulations.
Specific Purpose and Necessity
This proposal will delete the requirement in subsection 15402.1(d) that a self insurer submit a Self Insurers Annual Report when they change completely from self insurance to a fully insured policy from a carrier.
The purpose of the interim annual report is to update the claims liabilities on all claims administered by the outgoing administrator at the cutoff date of their administration of the claims for that self insurer. When there is a change in administration, the interim annual report is forwarded to the new administrator and is used to prepare the required year-end annual report. The new administrator, who is required to complete a full year annual report, will consolidate the figures from the interim annual report, with the figures from the period of time they administer.
The interim annual report is unnecessary because the self insured worker's compensation liability claims often remain with the current claims administrator when a self insurer leaves self insurance. The self insurer will continue to be required to submit a full year annual report in March of each year until all claims are closed. The new claims, after the effective dates of the workers compensation insurance policy, will be the responsibility of the insurance carrier and are not reported to SIP.
TECHNICAL, THEORETICAL, AND/OR EMPIRICAL STUDY, REPORTS OR DOCUMENTS
The Director did not rely upon any technical, theoretical, or empirical studies, reports or documents in proposing the adoption of this regulation.
ALTERNATIVES TO THE REGULATION CONSIDERED BY THE AGENCY AND THE AGENCY'S REASONS FOR REJECTING THOSE ALTERNATIVES
No other reasonable alternatives were presented or considered by theDepartment. The assessment must generate sufficient funds to cover the cost of the private self insurance program to implement Section 3702.5 of the Labor Code.
ALTERNATIVES TO THE PROPOSED REGULATORY ACTION THAT WOULD LESSEN ANY ADVERSE IMPACT ON SMALL BUSINESS
The Director has not identified any reasonable alternatives that would lessen any adverse impact on small businesses.
EVIDENCE SUPPORTING FINDING OF NO SIGNIFICANT ADVERSE ECONOMIC IMPACT ON ANY BUSINESS
The proposal eliminates unnecessary paperwork and does not add any requirements of business.
Existing Section 15402.1 requires a self insurer's administrator to submit an interim annual report if they leave their self insurance program. Subsection 15402.1(d) specifies that an interim report be completed when a self insurer leaves self insurance and insures their worker's compensation liabilities with an authorized insurance carrier. The deletion of this specific requirement will prevent self insurers and their administrators from filing a document that is unnecessary.