CRMBC: Myth vs. Reality
Self-insured groups have been active and successful in over 30 states for many decades. In order to illustrate the gap in quality information regarding SIGs, and address some common concerns directly, we offer the following comparisons:
Myth #1: If I join the CRMBC and another employer in the group has a catastrophic claim – such as a fatality or a paralysis – I will have to pay more money.
Fact: Self-insured groups are employer pools – excess losses for one member are indeed absorbed by the rest of the pool. But the CRMBC is comprehensively protected against catastrophic injuries by excess insurance coverage with A-rated insurers. The excess carrier covers all costs of all claims that come from a single occurrence, beyond the initial $500,000, whether it is one claim or 100. Catastrophic injuries generally do not require further funds from group members.
Myth #2: If another self-insured group falters, the CRMBC and my business can be forced to pay for their liabilities.
Fact: Self-insured groups like the CRMBC are ultimately supported by the tangible net worth of the group members. This means that any group needing additional funds must collect the funds from within its own membership. California has additional back-up for self-insured employers – the California Self-Insurers’ Security Fund – which steps in if any self-insured entity cannot meet its obligations. More about the Security Fund here.
Myth #3: If I join the CRMBC, I could be responsible for claims liabilities after I leave the group.
Fact: Self-insured group members only share responsibility for their time of membership. If a member decides to leave the group, its claims liabilities stay with the group, just as they would with an insurance company. In the rare case that additional funds were needed to cover the costs from a program year when the business was a member, they would indeed share responsibility for this special assessment.
Myth #4: Self-insured groups are unrated and therefore they can be a problem for members who need to be with an insurer that has an A.M. Best “A” rating.
Fact: The CRMBC has met all ‘A’ paper requirements for members, via its excess carrier, since it was formed in 2005. In addition to the ‘A’ paper of their excess insurance carriers who stand behind the CRMBC, the financial and operational controls of the group and validation of its financial health by state regulators has satisfied all requirements.
