No Guarantees from California's Insurance Guarantee Association

For five years California's business operators enjoyed the benefits of a deregulated workers' compensation insurance market place. Employee claims continued to be paid by the insurance companies, and premiums dropped at each renewal as carriers aggressively sought to gain market share. A year and a half later the market place has completely reversed itself, as carriers could no longer afford to offer premiums below the cost of the claims they were paying. In fact several carriers (Superior National, HIH America and Great States to name a few), have now been seized by the Department of Insurance and have been declared insolvent. Rates have steadily increased as fewer insurance carriers are able to offer quotations. For years business operators had contributed a premium tax of 1% to the California Insurance Guarantee Association (CIGA), to develop a fund to help pay claims in the event of an insurance company insolvency. However, after years of not paying any claims the charge was eliminated, and the fund remained at the ready. Beginning in the Fall of 2000, CIGA began paying claims on behalf of Superior National at a rapid pace. In response, the California Insurance Guarantee Association re-instituted its 1% of workers' compensation premium surcharge as of January 1, 2001, and has applied it to all new policies issued since that time. In addition, since the Spring of 2001, CIGA has been paying claims on behalf of HIH America as well. To help replenish the fund, the California State Assembly and Senate Insurance Committee have passed a bill to increase the charge to 2% of premium. This bill is awaiting Senate confirmation and Governor Davis' signature, but is expected to become law as soon as it is signed, instead of waiting for the traditional January 1, effective date. The premium tax raises approximately $62,000,000 annually at the 1% rate. At the 2% rate combined with higher premiums, the annual total is expected to be in excess of $130,000,000. The fund has been paying out $40,000,000 a month since last Fall.

Source: A. M. Best

New OSHA 300 Form Is Approved

Secretary of Labor Elaine Chao has announced that a new Occupational Safety and Health Administration (OSHA) rule on record keeping will go into effect as of January 1, 2002. The record keeping change is designed to help the government better track occupational injuries and illnesses. 'The rule increases employee involvement, creates simplified forms, and gives employers more flexibility to use computers to meet OSHA regulatory requirements. One of the most significant changes will come to the Log of Work-Related Injuries and Illnesses that will be revised and in the future referred to as the OSHA 300 Log. Additional record keeping changes will also take place as of January 1, 2002. For further details, or if you wish to receive a copy of the new OSHA 300 Log, please call (800) 533-6547.

Source: U.S. Department of Labor

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