California court upholds ruling: Staffing firms can’t self-insure workers’ comp

It would appear California understands the nature of PEO’s and Staffing firms having an ever evolving potential change in underlying Workers’ Compensation exposures, growth and financial liability they are assuming under a Self Insured Program.    This same risk is inherent with insurance carriers writing loss sensitive programs ( Large Deductibles and Retrospective policies)  for PEO’s and Staffing firms.  Responsible insurance carriers to protect themselves from credit risk and the potential of being under collateralized on an account need have controls in place to monitor the changes in exposures.  To be able to identify when there is a need to collect additional collateral on a program continually during the course of the program term, not just on an annual review basis.     To avoid the potential of being under collateralized.  It might not seem fair that other business exposures outside of PEO & Staffing can qualify for Self Insured status in California.   If California is not able, willing and or has the capability to continually monitor the potential change in liability exposure associated with allowing PEO’s and Staffing Firms being Self Insured, it would appear to be a responsible position they have taken.  

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