If adopted by state lawmakers and Gov. Eliot Spitzer, the plan would release nearly $2 billion in letters of credit and surety bonds to employers that are self-insured, the board said earlier this week. Currently, New York has a “silo approach” in which each employer posts a security deposit equal to its outstanding workers’ comp claims.
Under the proposal, employers would participate in a guarantee pool, with each employer’s contribution based on its credit rating and the amount of risk it brings to the pool. The system would be used to guarantee claims should an employer default on its workers’ comp obligations.
Reform legislation that the governor signed into law this year called for the Workers’ Compensation Board to recommend a new system to guarantee workers’ comp risks of individual self-insured employers.
There are 150 parent companies approved as individual self-insurers in New York, the board said. They have 525,000 employees in the state with a combined payroll of $27 billion.