• California Group Self Insured Plans are state approved alternatives to the use of an insurance carrier to provide workers' compensation benefits to employees.
• Each GSIP is reviewed and approved for operation by the California Department of Industrial Relations (DIR) Office of Self Insured Plans, in Sacramento.
• The DIR also provides ongoing oversight and auditing on every group.
• Each group is made up of employers in just one industry, thereby limiting exposure to claims and eliminating non related risks.
• Potential members must meet the requirements and standards set by the State of California Department of Industrial Relations to qualify for membership.
• Each group is run by the members, not an insurance company.
• Each GSIP hires their own claims administrator. This administrator is accountable to the group for their handling of claims.
• Specific occurrence and employers liability excess coverage is provided by an “A” rated, admitted insurance carrier.
• GSIP’s are a proven method of insuring Workers’ Compensation across the country with regulations enacted in 35 states.
• There is a joint and several liability obligation for each member

"A" Rated, Admitted Excess Insurance Carrier

Individual occurrence limited to the Self Insured Retention
Employers Liability claims limited to the Self Insured Retention with excess coverage available above the Self Insured Retention
Aggregate coverage available on most groups to protect against adverse frequency

Advantages:
• Control over membership - This allows the group to hand pick homogenous members that are a good risk, thus, avoiding price increases caused by adverse selection and exposures in unrelated classes of business. Underwriting is very selective, and is based on loss experience and other criteria.
• Reduction of moral and morale hazards - Members will "self police" more in a group than they would if being insured by a standard insurance company. Loss control becomes more of a priority when the cost of not following a program is borne directly by the member.
• Pooled peer resources - A homogeneous Group Self Insurance Program gives the members the advantage of specific loss control resources, support, and service that is specific to the group's industry.
• Rate stabilization — By having dedicated members, a group can ride out hard and soft markets by keeping costs, and thus, contributions stable throughout these cycles. Exposure is narrowed to one common industry, therefore, not allowing other industry risks to adversely affect costs for the group members.
• A reduction in cost - The main goal is to utilize all the above to achieve a better loss experience than companies in the general insurance market and, thus, receive dividends and/or enjoy costs that are lower than the standard market. Costs are also reduced significantly given that members are no longer paying the 'profit' load charged by standard insurance companies.

  Considerations

• Increased dedication - Insurance companies allow you to pay a premium and forget about insurance or risk. A self insured group, by its very nature, demands involvement. The Group Administrator and Claims Administrator, with oversight from the State of California Department of Industrial Relations-Office of Self Insurance Plans, can take care of the day to day duties associated with self insurance but the members must still get involved in decisions regarding the group, specifically through a member based Board of Trustees.
• Regulatory control — Regulations are intended to assure proper group formation and ongoing stability. Annual financial reporting will determine any imbalance of assets and liabilities. Restoration of financial capacity would be made through a contribution assessment and/or a forward price increase.
• Joint and several liability - As the group would share in the surplus created, they would also be financially responsible for any one member's losses, even if that member left the group. This is one of the foremost perceived risks to self insurance and, as such, is protected against in numerous ways. First and foremost, the contributions required by the group have been calculated by certified actuaries to meet the losses. The contributions and the claims are overseen by a member based Board of Trustees, the Group Administrator, the Claims Administrator and the State of California Department of Industrial Relations-Office of Self Insurance Plans. Excess insurance is put in place to limit the amount of money the group would have to ultimately contribute. Finally, there is a bond, security deposit, and/or letter of credit posted as required by the State of California Department of Industrial Relations- Office of Self Insurance Plans. No dividend distribution until group is financially established - One of the safety nets, in addition to the above, is the fact that the State of California Department of Industrial Relations-Office of Self Insurance Plans will not allow a dividend to be distributed during the first 3 to 5 years of a program. This allows the "pot" to grow to sufficient size, and absorb any surprise increase in losses.