Department of Insurance Adjusts State Comp Dividend Policy

Recently, the State Compensation Insurance Fund announced it would award policyholders $50 million in dividends based on the results from the 2011 policy year - only if those clients renewed.

After it came up against criticism from the insurance industry for making it a requirement for clients to renew with the State Fund in order to receive the dividend, the Department of Insurance convinced the State Fund to withdraw that stipulation. Since the dividend was based on past performance, many insurance experts felt all companies insured by the State Fund in 2011 earned the dividend and deserve to receive it whether or not they renew.

The State Fund is the largest workers’ compensation insurance company in California primarily because it is the market of last resort.  If unable to secure coverage from private insurers, companies can secure coverage from the State Fund. Although the State Fund does provide coverage, its rates tend to be very high relative to the market rates. Workers’ compensation reform in 2003 improved the availability of coverage in the market and a good portion of the State Fund business moved to the private market.  

All 2011 policyholders will receive the dividend either as a credit against their State Fund renewal or a cash payment after the policy year is finalized.  If you are a State Fund client, you should work with your current agent or the State Fund directly to make sure you receive your dividend. In the meantime, if you would like to have Western Growers Insurance Services represent you in securing the dividend and/or helping you to secure other workers’ compensation, business or personal insurance, please contact us.