SENATE BILL REPORT

SB 6735

BYSenators Patrick, Lee, Matson and Barr

Providing for employer workers' compensation group self-insurance.

Senate Committee on Economic Development & Labor

Senate Hearing Date(s):January 30, 1990; February 2, 1990

Majority Report:     Do pass.

     Signed by Senators Lee, Chairman; Anderson, Vice Chairman; McDonald, Matson, Saling, West.

Senate Staff:David Cheal (786-7576)

                February 9, 1990

AS REPORTED BY COMMITTEE ON ECONOMIC DEVELOPMENT & LABOR, FEBRUARY 2, 1990

BACKGROUND:

Under the industrial insurance law of Washington, an employer must secure its obligation to pay industrial insurance benefits either through the state fund, or by qualifying and obtaining certification as a self-insurer.  A third option is available only to hospitals and school districts who are permitted to form groups which may then qualify as self-insurers. 

Group self-insurance is permitted in approximately 24 states.  No other state which has an exclusive state fund for industrial insurance permits group self- insurance.  Washington is one of six exclusive state fund states.

The Senate Committee on Economic Development and Labor commissioned a study which explores, analyzes and compares the experience of 14 states in the field of group self-insurance.  That study was completed in August 1989, and copies are available from the committee staff.

SUMMARY:

Fifteen or more employers who are members of an organization formed for a purpose other than obtaining workers' compensation coverage may enter into agreements to form a group for the purposes of meeting their industrial insurance obligation.  Other conditions are that the formation and operation of the group will improve accident prevention and claim management, that the organization has been in existence for at least two years, and that the occupations or industries of the employers within the organization are substantially similar. 

The self-insurance group thus formed shall be deemed an employer for the purposes of Title 51, and may qualify as a self-insurer if it meets all other self-insurer requirements.

In the event of insolvency of any group or any employer within a group, assessments shall be levied on all group self-insurers except school districts and hospitals.  The assessment shall be an amount necessary to cover future benefits not covered by the defaulting group or employer's security deposit and reinsurance.  Assessments will be made on the basis of the ratio of their claim costs to the claim costs of all group self-insured employers.

Groups or member employers who voluntarily surrender their certification shall be assessed for a period of not more than three calendar years following the termination date of their certification.

The director is given broad rule-making authority.

Appropriation:  none

Revenue:   none

Fiscal Note:    requested

Senate Committee - Testified:   Clif Finch, Association of Washington Business (pro); Linda Matson, NFIB (pro); Kathleen Collins, Association of Washington Cities; Steve Wehrly (pro); Jesse Gary (pro); Jan Gee, Washington Retail Association (pro); Larry Stevens, Mechanical Contractors Association (pro)