California insurers to see no valuation of insurance coverage, first in 20 years

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California workers’ compensation insurers and their customers are getting a bit of a break this year.

The California Insurance Guarantee Association will not be collecting its annual valuation on workers’ compensation policies for 2019.

This is the first time that CIGA has not collected the assessment on workers’ compensation policies for about 20 years, according to Brad Roeber, executive director of the association.

At one time, over 100,000 workers’ compensation claims were being processed by CIGA.

Brad Roeber, the new executive director of the California Insurance Guarantee Association.

“We’re now at around 12,000,” said Roeber, who on Jan. 1 succeeded retired CIGA chief Wayne Wilson.

CIGA may charge an appraisal for three funds to pay property / casualty claims: workers’ compensation, auto and home owners and everything in between. Appraisals are scarce for everyone except the workers ‘compensation fund, largely due to the numerous bankruptcies of workers’ compensation insurers around 2000 in the future.

According to AJ Longo Insurance Brokers, an observer of the workers ‘compensation industry, CIGA at one point had a deficit in the workers’ compensation fund of $ 4 billion, while the last 20 years of valuations of employers ranged from 1% to 2.6% of the premium.

CIGA can assess up to 2 percent, but must get permission from the Insurance Commissioner to assess more than that.

“For the better part of 20 years, there has been valuation in the compensation fund,” Roeber said.

The decision not to conduct the evaluation this year was taken by the CIGA Board of Directors over the summer. It is effective on 2019 policies.

Roeber said the reason for waiving this year’s assessment is simple.

“We haven’t had employee insolvencies for a little while,” he said, attributing this to many potential factors. “Strong regulation and responsible underwriting and pricing practices lead to the success of our business. “

Prior to taking the position at CIGA, Roeber was COO at Meemic and Freemont Insurance Cos. in Michigan from 2014. Prior to that, he was Regional President at AAA in Aurora, Ill..

Despite the lack of valuation, the workers’ compensation premium in California has declined, according to the California Worker’s Compensation Assessment Bureau.

The WCIRB released its quarterly experience report in December, which showed that premiums for the first nine months of 2018 were 3% lower than for the same period in 2017.

According to Roeber, CIGA is now processing about 30,000 complaints in total, and the number of complaints has declined in all three funds.

CIGA recently witnessed claims handling activities from Merced Property & Casualty Co., which was driven into insolvency by the camp fire that started on November 8, 2018 and nearly destroyed Paradise and surrounding towns. .

In early December, regulators took control of the insurer. The company only had 200 policies in all of Butte County, but it was a small insurer, listing only $ 23 million in liabilities, records show.

Since CIGA received the Merced files, Roeber said claims have started being paid and refunds are being made on all unearned premiums. He said the process for paying Merced claims has been speeding up lately.

“Now we are starting to move them pretty quickly,” he said, adding that the size of the claims is important. “Lots of fat. We have issued checks. We haven’t seen real estate insolvencies for a long time.

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