As the turmoil surrounding a number of New York’s self-insured trusts continue, the Independent Insurance Agents & Brokers of New York Inc. has outlined four principles to serve as a guideline to advance and evaluate legislative and regulatory proposals.
With 12 trusts having failed since 2006, including the recent termination of five trusts operated by Compensation Risk Managers, the suspension of CRM’s license and the New York State Workers' Compensation Board's finding that at least 10 trusts operating in the state are underfunded, IIABNY recognizes the significant disruption occurring in the marketplace.
IIABNY, whose presence has been at the forefront in notifying—as well as advising— its member agencies and brokerages, is also active in searching for solutions to the self-insured trust crisis at hand.
The principles IIABNY will be guided by are the following:
1. There must be put into place a short term solution that assures outstanding claims are paid in full and timely;
2. Healthy trusts should not be looked to for assessments or other means of extracting funds to help pay the obligations of the failed trusts. This would simply exacerbate the problem by putting more trusts and their employer members in jeopardy;
3. Regulators should aggressively assess the assets of the failed trust managers and their member employers to obtain funds to help pay the claim obligations of the trusts;
4. A long-term solution needs to be put into place that provides a better approach to trust oversight and establishes some type of backstop such as a guaranty fund.
“We are confident that, if followed, these principles will lead to addressing both the short term and long term issues facing employers and their employees that have chosen to be served by a self-insured trust,” said IIABNY Chair Neal Sullivan.