STATE COMPENSATION INSURANCE FUND to cover Out-Of-State Employees?

Written by on 6/23/2011 12:04 AM . It has 0 Comments.

Since its creation in 1914, State Compensation Insurance Fund (SCIF) has had two primary roles in the California Workers’ Compensation Market; (1) to make Workers’ Compensation coverage available to all employers in the state and (2) to compete in a fair manner with private carriers.  These roles are of supreme importance to California’s employers, especially when workers’ compensation market hardens and private carriers refuse to provide coverage for employers – as happened just a decade ago when over 25 carriers went insolvent in under 3 years. 

California Assembly Bill 228 (AB 228) aims to expand the service provided by SCIF to California employers who also have operations, and employees, in other states.  California employees are covered by the current SCIF policy form when they are working temporarily out-of-state, but not if they are primarily stationed out-of-state.  Employers, covered by SCIF, who currently have out-of-state employees, must purchase additional workers’ compensation coverage from other carriers to adequately cover these out-of-state employees.

AB 228 aims to eliminate the necessity for employers to purchase additional workers’ compensation policies to cover out-of-state employees by explicitly giving SCIF the ability to offer coverage for employees located and/or stationed out-of-state. 

As with any political issue, there is always opposition; in this case it happens to be the private insurance carriers that compete with SCIF.  One of the arguments provided by the opposition to AB 228 is that it will unfairly impact the ability of private carriers to compete due to SCIF’s federal tax exempt status. 

As a broker and advocate for my clients, I believe that this type of legislation would offer a beneficial and necessary service to insurance customers insured with SCIF. 

-Matthew Davis MBA, AAI

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