Conservator Appointed to Manage Contractor’s Access Program of California

California’s Department of Industrial Relations (DIR) appointed Bickmore Risk Services and Consulting as conservator for the Contractor’s Access Program of California (CAP), a self-insured group (SIG) that has insufficient deposits to cover estimated future liabilities. Bickmore will manage the group’s financial affairs, including claims disbursement and other payables due.

“I assigned a conservator to step in and determine what options CAP has at this time to correct its financial shortfall,” said DIR Director John Duncan. “This is a deliberate course of action as set forth in regulations.”

This SIG of construction contractors is in an industry that has experienced as much as a 70 percent decrease in payroll reported by insurance brokers. According to state Office of Self-Insurance Plans (OSIP) spokeswoman Erika Monterroza, the group has had as many as 266 members.

“Upon our request, the group’s administrator submitted a deficit plan last fall to correct the 2008 insufficiency,” said OSIP Chief James Ware. “It became clear this February that the group’s members could not meet the requirements of the plan, and an additional deficit was reported for 2009.”

Regulations for SIGs in California require that a deposit filed with OSIP cover 135 percent of estimated future liabilities. CAP’s deposit is currently at 110 percent.

“California’s regulations for self insured groups are the most stringent in the nation,” Duncan said. “We are close to stakeholder consensus on further improvements to the regulations, which will provide more frequent financial reporting.”

CAP became aware in October that their member base had diminished from 189 at the beginning of 2009 to 137. Its administrator, New York-based Compensation Risk Managers (CRM), voluntarily requested an order of revocation be issued after December 31, when the current self-insured term ended. The revocation became effective January 1.

In March, OSIP ordered CAP to provide weekly reports on all assessments received to correct the future liabilities shortfall as laid out in its deficit plan, and to obtain OSIP’s approval prior to making any payments other than workers’ compensation benefits.

“CAP members requested that a conservator be appointed in order to return the group to full financial solvency or to determine whether liquidation of the group’s liabilities is necessary,” Ware said.