California Credit Unions Create Their Own Solution to Workers Compensation Crisis

SACRAMENTO, Calif. – When the top 25 credit unions in California met in January 2003 for roundtable discussions of various challenges facing credit unions here, Travis Credit Union Human Resources/Training Vice President Chris Daniels mentioned that his credit union was seriously looking at self-insurance under workers compensation. That comment began what would be a long process for WesCorp FCU, Travis CU, KeyPoint CU (formerly AEA CU), Patelco CU, and SAFE CU to form the Credit Union Self-insurance Group (CUSIG). The CUSIG Board consisting of Patelco CU Human Resources Vice President Ed Cassady, chairman; SAFE CU Human Resources Vice President Virginia Wade, vice chair; Chris Daniels, treasurer; KeyPoint CU Human Resources Vice President Suzanne Carlisle, secretary and WesCorp FCU Human Resources Vice President Tom Swedberg, member-at-large; incorporated the name on November 17, 2003 and began the filing process with the state. “Wanting more information about self-insurance I spent about an hour on the phone with the California State director and his first words to me were I’ve been here waiting for this call for years’” said Suzanne Carlisle CUSIG board secretary/KeyPoint CU vice president of human resources. “He also said that because of our low risks credit unions are primed for self-insurance.” Rather than purchase insurance, CUSIG will pool its resources to insure each member’s exposure. Claims are paid from the pool of premiums and the members control the operation of the group. A third party administrator and group administrator will oversee the program. In general, the success of a workers’ compensation self-insurance program depends on the effectiveness of loss control activities and claims supervision. The group hopes to have self insured status approval from the Department of Industrial Relations by February 1. Requirements for credit unions interested in joining CUSIG include a fiduciary study, a minimum of $500 million in assets, an experience modification rating of less than 1.02 and a minimum payroll of $500 million. In addition, credit unions with operations outside of the state are not covered. Currently 14 credit unions are in the application review process. Carlisle says as the group grows they hope to open it up to smaller sized credit unions. “Education is the key to successfully moving forward with this,” said Carlisle. “We have to stay smart and this move will only work if each credit union in the group is committed to a safety program.” According to Carlisle, within the first year it is estimated that her credit union will experience about a 20% decrease in premiums and in 2005 as much as a 60% reduction. Other credit union estimates reveal similar decreases. Workers compensation rates in California are twice the national average. With over two dozen private insurance carriers here going out of business in the last few years other carriers don’t want to provide coverage in California. The situation has left California’s nonprofit insurer of last resort – the State Compensation Insurance Fund – to write coverage for more than half the companies in the state. According to the Workers’ Compensation Insurance Rating Bureau, the total cost of workers’ compensation in California, including both insured and self-insured businesses, grew from $9 billion in 1995 to $29 billion in 2003, despite serving fewer workers. Carlisle says that businesses here are currently looking at a 45% increase in workers compensation and premiums due in large part to fraud that has gone unchecked and abuse of the system. For example, comparisons to injured workers in 12 of the largest states find that California workers chiropractor visits are twice as high as others with an average of 34 visits. [email protected]