California Self-Insurers Board Greenlights Workers’ Comp Alternative Security Program

The board of the California Self-Insurers’ Security Fund has approved the 2019/20 Alternative Security Program.

The ASP provides a financial backstop to replace security deposits required to collateralize self-insured workers’ compensation liabilities. It reportedly has freed $6.6 billion in working capital.

The participation fee, which is calculated on a sliding scale based on credit risk, was also reduced 13% versus last year.

All employers in California are required to have workers’ comp. Meeting this requirement can be accomplished either by buying an insurance policy, or through obtaining authority from the Department of Industrial Relation’s Office of Self Insurance Plans to self-insure workers’ comp liabilities.

Self-insured employers are required to maintain a deposit to collateralize their risk in an amount equal to estimated liabilities. The deposit, which can be posted in cash, letters of credit, surety bonds or securities, limits the employer’s ability to use their cash or credit line to expand their business.

The ASP enables members to free up their cash or line of credit while the ASP assumes responsibility for their security deposit posting requirement.

California currently has more than 3,500 private employers protecting more than 2.3 million workers representing a total payroll of nearly $100 billion through self-insurance workers’ compensation plans.

There are 358 participants in the program ASP, according to the fund managers.

Topics California Carriers Workers' Compensation