Independent Banks Partner to Save on Calif. Workers’ Comp Costs

Facing ever-increasing workers’ compensation costs, a group of California banks received approval from the FDIC and filed an application with the State of California to form a self-insurance group (SIG) and is inviting other banks from throughout the state to join them.

A major benefit of the group will reportedly be the ability to immediately take advantage of the benefits of state reforms and to reduce costs. The banks should reportredly see a reduction of approximately 20 percent to 30 percent on their workers’ comp insurance costs over the cost of purchasing a policy from a carrier.

Utilizing a reportedly little-known state regulation, the group is launching the self-insurance group to cover bank workers’ comp exposures with a goal to control losses and reduce costs. The Independent Banks Self-Insurance Group Inc., or IB-SIG as it will be known, will provide the umbrella organization under which the member banks will operate.

State regulations since 1993 allow two or more employers within the same industry to form a nonprofit mutual benefit corporation for the purpose of self-insuring for workers’ comp. The two initiators of the IB-SIG – NVB Business Bank (formerly Yolo Community Bank) of Woodland and North Valley Bancorp of Redding – project that IB-SIG operations will begin by July 1, 2005.

“Workers’ compensation costs are one of our highest priorities to decrease expenses at our bank,” said Mark Day of NVB Business Bank of Woodland. “The formation of a bank self-insurance group makes sense not only to control costs, but also to take even greater advantage of the recent state workers’ compensation reforms.”

The group has appointed Bickmore Risk Services as administrator of the self-insurance group and ABD Insurance Services as their marketing agent.

“Cities, counties and school districts have successfully utilized self-insurance pools for workers’ comp and other insurance areas for years and have not only saved money, but just as important they have controlled losses,” said Linzie Kramer, president of Bickmore Risk Services.

IB-SIG will self-insure workers’ comp losses up to $500,000 and will purchase excess coverage up to $20 million. The group is now soliciting membership from interested banks throughout California.

Self-insurance groups, or SIGs as they are known, allow the members to reportedly control every aspect of the operation of their insurance program. Approximately 32 cents of every contribution dollar typically goes to brokerage and administrative overhead. Experience reportedly shows that by forming a group, the member banks can begin to get these costs under control.

Administrative costs under a self-insurance group have reportedly been found to be significantly less than that paid through traditional insurance purchase programs.

Additionally, the members will institute loss control measures which are important to reducing workplace injuries and their associated costs.

IB-SIG members will have site inspections and reportedly benefit from professional loss control specialists who will support members in their goal of reducing losses and creating a safer workplace.

Another major area of potential savings is through aggressive claims
administration. AIMS (Acclamation Insurance Management Services), a third-party claims administrator, will process and manage claims.

The group has established caseload maximums and other claims management performance standards to ensure that claims are processed and handled in a prompt fashion.

Member banks will have control over the processing of these claims and will make direct decisions over claims settlement. A proactive loss-control program and sound claims administration will reportedly help to significantly reduce workers’ comp costs.

For more information on self-insurance groups, visit the Bickmore Risk Services Web site at http://www.bickmoreriskservices.com.