The Office of General Counsel issued the following opinion on July 27, 2005, representing the position of the New York State Insurance Department.
Re: Excess Workers' Compensation - Insurance Policies for Self-Insured Employers
May a self-insured employer purchase excess workers compensation insurance from a non-admitted E&S carrier?
The Workers' Compensation Law and the regulations of the Workers' Compensation Board govern employer self-insurance for workers' compensation claims. Therefore, this is a question under the jurisdiction of the Workers' Compensation Board and, accordingly, the Department defers to the Workers' Compensation Board.
The inquiry is of a general nature. The inquirer is a wholesale broker specializing in self-insured workers' compensation in Pennsylvania. In the inquirer's question, the inquirer referred to "a non-admitted (E&S) carrier." The Department assumes for purpose of this analysis that the inquirer means an unauthorized insurer.
The Workers' Compensation Law and the regulations of the Workers' Compensation Board govern employer self-insurance for workers' compensation claims. 12 NYCRR § 316.2(a), which applies to self-insured employers, provides as follows:
(a) In addition to the deposit of securities and/or cash and/or the filing of a surety bond and/or irrevocable letters of credit required by the chair, the applicant shall provide security against catastrophic loss arising out of one accident, by filing with the chair the carrier's certification of an excess, reinsurance contract issued to the self-insurer in form, content and amounts acceptable to the chair; such contract must be issued by an insurance carrier authorized by Superintendent of Insurance to write said excess contract in New York State, and must contain specific coverage for workers' compensation. (emphasis added)
Therefore, it appears that self-insured employers must purchase excess workers' compensation (re)insurance from an authorized insurer to satisfy the requirements of the Workers' Compensation Board. However, this is ultimately a question under the jurisdiction of the Workers' Compensation Board and, accordingly, the Department defers to the Board.
For further information one may contact Assistant Counsel Brenda M. Gibbs at the Albany office.