State Legislative/Regulatory News

Self-Insurance Institute of America, Inc.
Exclusive Reporting for the Week of February 20, 2014

February 20, 2014 — This is your weekly update of state legislative/regulatory developments affecting companies involved in the self-insurance/alternative risk transfer marketplace. Should you have any questions on information provided in these reports and/or would like to alert SIIA to new state legislative/regulatory activity (health care, workers’ compensation and/or captive insurance matters) we may have missed, please contact Adam Brackemyre, Director of State Government Relations directly at 202/463-8161, or via e-mail at abrackemyre@siia.org.

Illinois- Group Self-Insured Workers Comp Legislation
In Illinois, potential legislation would threaten self-insured workers compensation pools by drastically changing how they are regulated. In response, SIIA is building a coalition to defeat it.

SIIA has already received an advanced draft copy of the legislation, very similar to last year’s SB 1873, and reviewed it. The legislation would deem all self-funded workers compensation groups to be mutual insurance companies and be regulated like them. Self-insured groups not in compliance could be declared to be in a hazardous financial position by the Insurance Commissioner.

The Illinois Department of Insurance (DOI) is the driving force behind the initiative, which DOI staff claim will stabilize the self-insured group market. Industry veterans view the legislation as an attempt to eliminate the market. Thankfully, a knowledgeable source in Springfield has informed SIIA that this legislation isn’t the highest legislative priority for the DOI this year.

Nevertheless, SIIA is working will a collation of self-insured groups and friends to ensure that the legislation does not become law this year.

Oregon- Group Self-Insured Workers Comp Legislation
SIIA is monitoring another self-insured workers comp bill in Oregon.

SB 1558 would give self-insured workers groups the ability to dissolve and cede claims to the state workers compensation fund. The intent of this legislation appears to ensure that employees formerly covered by insolvent self-funded trusts continue receive workers comp coverage. According to testimony, one large and several nonprofit self-insured trusts have recently become insolvent.

Although SIIA understands the political issues, it is concerned about possible unintended consequences of the legislation, giving employers the option of transferring costs to the state. Under Oregon law, self-funded groups must deposit the greater or $100,000 or one year of expected claims into an escrow account, so there is no a free lunch. However some firms could be tempted to dissolve their trusts if they expect increased workers comp claims.

Oregon – Stop-Loss Legislation
Finally, there is some good news to report. HB 4050, which will permit groups of 51-100 purchase stop-loss insurance once the definition of “small group” extends to 100, has passed the House and is in the Senate.

The Senate will consider an amendment to repeal the current stop-loss prohibition in the 2-50 market, an amendment that did not receive a vote in the House.

SIIA sent a letter of support to urging the Senate to pass HB 4050 and to adopt the amendment removing the current stop loss prohibition. As SIIA members know, Oregon is one of three states that does not permit certain businesses to purchase stop-loss coverage.

SIIA Legislative/Regulatory Conference
If you have not already done so, make plans to attend SIIA Legislative/Regulatory Conference scheduled for April 23-24, 2014 in Washington, DC. Conference details, including registration forms, can be accessed on-line at www.siia.org, or by calling 800/851-7789