As an alternative insurance choice, a self-insurance group (SIG) can lower costs for workers’ compensation coverage and obtain annual savings on workers’ compensation costs. However, not all self-insured groups operate in the same way. A prospective member of a SIG should look for specific characteristics when considering whether to join the group.
“A well-managed SIG can distinguish itself in the marketplace and better serve its members and injured workers,” said Mark Stroyeck, Vice President – Workers’ Compensation Underwriting at Safety National. “In addition, by avoiding regulatory pitfalls and issues associated with failure to comply with state laws and requirements for self-insurance, the SIG can focus on delivering quality service, particularly in areas of loss control and claims management.”
By turning its focus on these two areas, the SIG can earn the loyalty of its members and the respect of regulatory oversight authorities and the appreciation of the injured workers it serves.
Well-managed SIGs generally take the following steps:
Annual Review of Operations
The board of trustees in a well-managed SIG reviews their plan of operations annually. This review helps the board ensure that the group still meets the purposes for which it was created. It is also a valuable step toward ensuring that economic circumstances or new legislation do not negatively affect the group.
High Standards for Service Providers
When selecting a service provider, it is important that groups have clear-cut standards by which they assess performance. For example, each service provider should demonstrate that they know, follow and comply with applicable state statutes and regulations. It is crucial that the board of trustees hold service providers to high standards and results.
Understanding of Financial Solvency
The first step in understanding the financial solvency of the SIG is for the board to make sure it is meeting the capital requirements found in the self-insurance legislation of the state of domicile. The board and regulators need to know what has transpired in the past regarding liabilities and funding to plan for future success.