Garamendi Approves Worker’s Comp Bailout
California´s insurance commissioner has approved a bailout plan that will enable an industry fund to continue to pay medical and disability claims for about 40,000 injured workers.
The California Insurance Guarantee Association pays claims on workers´ compensation, auto, homeowners´ and liability insurance policies when private insurers become insolvent. It´s facing a funding crunch that could force it to delay or cut off payments to thousands of workers who suffer job-related injuries because of increasing instability and rising costs in the workers´ comp market.
Since 2000, at least 25 workers´ comp carriers have gone out of business. Under the plan approved by Garamendi, the association will borrow $170 million from funds used to cover auto and homeowners´ claims to pay workers´ comp benefits.
The association also plans to seek approval from the Legislature to sell $500 million in revenue bonds to buttress its finances.