Office of Self Insurance Plans (OSIP) strengthens oversight of self-insured groups
Sacramento—The California Department of Industrial Relations’ (DIR) Office of Self Insurance Plans (OSIP) today announced it is tightening oversight and regulations for self-insurance groups (SIGs) in California. OSIP’s moves are designed to ensure that SIGs are properly covered for future liabilities, protecting both employers and employees.
“Self-insured groups play an important role in California’s economy, because they represent so many areas of industry,” said DIR Director Christine Baker. “It’s vital to improve the solvency of these groups so they can weather the twists and turns of the market. OSIP’s strong guidance and oversight will protect every party.”
California has one of the largest self-insurance programs in the nation. The 31 SIGs in the state represent businesses in agriculture, construction, education, finance, hospitality and transportation, among others.
OSIP authorizes qualified employers to provide their own coverage for workers’ compensation liabilities. Small and medium-sized businesses have the option of joining with others in the same industry to self-insure their workers’ compensation liability as a group in a SIG. All SIGs must be approved by OSIP and are required to post a security deposit covering a minimum of 135 percent of their estimated future liabilities. They must also conduct an annual financial audit performed by an independent Certified Public Accountant. The audit is sent to OSIP for review.
OSIP has recently issued three regulatory guidance letters to tighten oversight of the SIGs. The letters spell out duties and responsibilities for boards of trustees, reporting requirements for annual financial statements, and actuary responsibilities and reports. OSIP has also advised SIG administrators that the groups will not be able to accept new members after July 1 if they have a deficit or have not fully posted their required security deposit.
“We are committed to providing strict regulatory oversight and guidance to SIGs and the entire self-insured community to ensure a fair, level and financially sound marketplace,” said Jon Wroten, chief of OSIP. “OSIP will continue to closely monitor all SIGs in California in order to provide the greatest protection and benefit to covered employers, their employees, and all interested parties.”
The Automobile Dealers Compensation of California SIG (AD-COMP) recently notified its current and former members that its board of trustees had determined that an assessment to increase its capital was required to remedy program year deficits. It is anticipated that other SIGs may also make assessments in order to increase their capital.OSIP’s website includes information and resources for SIGs and their affiliate members, including requirements, forms, and other tools. In March, OSIP launched new audit tools to help self-insured employers and their third-party administrators understand the auditing process
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