September 17, 2003
The Georgia Self-Insurers Guaranty Trust Fund has been in existence for thirteen years. During this period, more than twelve million dollars have been paid to injured workers, medical providers and beneficiaries. More than thirty self-insured employers have become insolvent during this time frame. To date, no employer has been asked to pay an extraordinary assessment to help subsidize the costs associated with these bankruptcies. However, analysis of self insurance in Georgia reveals the need for immediate remedial action.
For the past two years, the State Board of Workers’ Compensation and the Trustees of the Georgia Self-Insurers Guaranty Trust Fund have jointly studied the issue of security for self insurance and how other states have attempted to secure their systems. During this period of analysis and scrutiny, the revelations of Qualcomm, Enron, Tyco and many others have revealed the frailty of the business accounting system. Likewise, the newspapers have reported the increased frequency of bankruptcy being used as a tool to manage corporate financial distress.
The harsh reality of today’s economic climate has an immediate potential impact on Georgia’s self-insured employers. Georgia law provides that self-insured employers may be “specially assessed” annually to offset a decline in the funded level of the Georgia Self-Insurers Guaranty Trust Fund. To date, no “special assessments” have been levied. However, analysis suggests that if no changes are made to stabilize the current system, future assessments are probable.
Investigation demonstrates that employers want to preserve the right to self-insure and control their own destiny. Likewise, the overwhelming sentiment is that each employer should be responsible for adequately securing its own workers’ compensation liability and yet, at the same time, not be subjected to the unpredictable risk of claims against other employers.
The Georgia State Board of Workers’ Compensation is statutorily charged with the responsibility of setting the amount of security for each self-insured employer. The State Board of Workers’ Compensation, with the endorsement of the Governor’s office, and the Trustees of the Self-Insurers Guaranty Trust Fund has recently adopted a new approach to setting security based on each employer’s reserves and loss payment history. This approach is consistent with what currently is being done in a number of other states. The philosophy is simple; make each self-insured employer responsible for adequately securing its own liabilities. The Georgia Self-Insurers Guaranty Trust Fund is intended to be a safety net to cover unexpected shortfall and not a primary source of payment.
Some employers will be affected by these changes and many will not. Please join us for an in depth discussion of the changes in the self insurance system, the setting of security and implementation of the new system. Trustees and representatives of the State Board of Workers’ Compensation will be present to participate in the discussion and respond to your questions. Directions are enclosed for your convenience.
Very truly yours,
Georgia Self-Insurers Guaranty Trust Fund
The Board of Trustees