Employers may obtain permission to insure themselves for their workers' compensation liabilities. Private employers may insure themselves individually or join a pool with other employers. The Commission oversees individual self-insurers, while the Illinois Division of Insurance evaluates group self-insurers. Public employers may self-insure without obtaining approval.

As the cost of conventional workers' compensation insurance has fallen, employers have chosen to purchase traditional insurance plans, and the number of applications for self-insurance has fallen. After reaching a peak of 496 parent companies in the Commission's self-insurance program in FY95, the number fell to 297 in FY07.

FREQUENTLY ASKED QUESTIONS

Requirements to self-insure

What employers can apply to be approved by the Commission as self-insurers?
What must an employer do to maintain the self-insurance privilege?

Application process

Where can I obtain the application forms?
How long does the application the process take?
Who reviews the applications?
How will the application be reviewed?
What is conditional approval?
What are the earned points on the financial ratios?
Must an employer maintain insurance coverage while the application is pending?

Application fees

Is there an application fee?
Are there any other fees a self-insurer must pay?

Security requirements

What security is required?
What form of security is acceptable?
Is excess insurance required?
Can an employer insure a portion of its operations with an insurance carrier and self-insure another, separate portion?
Is a parent guarantee agreement required?

Claims administration

How are claims administered?

Self-insured companies

What companies have received permission from the Commission to self-insure?

Terminating self-insurance

Can the self-insurance privilege be terminated?
What if an employer wishes to leave the self-insurance program?

Insolvent self-insurers

What self-insured companies have become insolvent recently?

Additional information

How do I obtain more information?

What employers can apply to be approved by the Commission as self-insurers?

A private employer may apply to the Commission for authorization to insure its own workers’ compensation liabilities. A private employer is an individual employer and does not include group self-insured employers, the State of Illinois, any political subdivision of the state, unit of local government or school district, or any other public authorities or quasi-governmental bodies or their subunits.

To qualify for self-insurance, an employer must meet certain requirements, including the demonstration of sufficient financial strength to meet workers’ compensation obligations in a timely manner, and providing security as required by the Commission. (See Commission Rules , Section 7100.70.) As a self-insurer, the employer is responsible for the payment and administration of its workers’ compensation claims.

What must an employer do to maintain the self-insurance privilege?

A self-insured employer, upon notice from the Commission, must file an application each year to continue the self-insurance privilege, must continue to meet the financial and security requirements as required by law and provide interim financial statements as required by the SIAB. A self-insured employer is required to promptly pay benefits due to injured employees or their dependents; meet all assessment obligations in accordance with the Workers’ Compensation and Occupational Diseases Acts; report compensable injuries, diseases, and deaths to the Commission as required by law; and promptly notify the Commission of any change in financial condition that will impact the company’s ability to self-insure.

In addition, a self-insured employer is required to immediately notify the Commission before the contemplation of liquidation, sale, or transfer of ownership is made and make arrangements satisfactory to the Commission for the payment of all existing liabilities.

Where can I obtain the application forms?

Application forms for self-insurance may be found on the Commission's Forms page.

How long does the application the process take?

An applicant is required to submit the application to the Commission at least 60 days prior to the requested effective date of self-insurance. The Commission makes every effort to process the application so that the requested date is met. This time frame begins upon receipt of a completed application. Any delay in submitting necessary information may increase the application processing time.

Who reviews the applications?

The Self-Insurers Advisory Board reviews initial and renewal applications and makes recommendations to the chairman of the Commission. The chairman of the Commission serves as chairman of the board, and the board consists of six other members appointed by the Chairman who are expert in matters of self-insurance for workers’ compensation liability. One of the six members shall represent the general public. Members serve four-year terms or until their successor is appointed.

How will the application be reviewed?

The Commission’s Self-Insurers Advisory Board and staff conduct a review based upon the information submitted by the employer and any other information the Commission requests. Important factors considered are the applicant’s financial condition, the nature and hazard of the employment, the number of employees, the amount of payroll, the employer’s claim experience (frequency, severity and cost), claims administration program, and any other factors that may impact the ability to self-insure. The review also includes consideration of the earned points on three financial ratios. There is no required minimum number of employees or amount of payroll to qualify for self-insurance.

What is conditional approval?

If an applicant qualifies for self-insurance, the Chairman will first issue a notice of conditional approval to the applicant. The notice directs the applicant to meet certain conditions before a certificate of self-insurance is issued. These conditions generally require the applicant to complete all necessary paperwork and furnish the Commission with required security. When all conditions are met, a certificate of self-insurance is issued. This certificate constitutes a final approval to self-insure.

What are the earned points on the financial ratios?

Commission rules set forth a system of points (0 to 6) that may be earned on each of three financial ratios, which are considered by the Board in determining an employer’s financial strength.

The three ratios are:
1) Current assets to current liabilities;
2) Capital and retained earnings (net of treasury stock) to sale (less discounts); and
3) Capital and retained earnings to long-term debt.

The points earned on each of the ratios are added together for a total score (0 to 18). A total score of 9 or above creates a rebuttable presumption that the employer’s application should be approved conditioned upon furnishing of appropriate security.

Must an employer maintain insurance coverage while the application is pending?

Yes. A new applicant is required to maintain workers’ compensation insurance coverage. Coverage must be maintained until the applicant has met all the conditions to self-insure and the Commission issues a certificate of approval to the applicant with the effective date of self-insurance. The last day of insurance coverage should coordinate with the effective date of self-insurance so there is no gap in coverage.

Is there an application fee?

Yes. Each private employer must pay a non-refundable application fee of $500. Where the applicant is a corporation, a $500 fee is also required of each and every subsidiary to be included in the self-insurance program. For non-profit corporations, an application fee is required of each and every controlling person and each and every employer that applies.

The fee is required for both initial and renewal applications. The application fee must be paid by check or money order payable to the "Self-Insurers Administration Fund."

Are there any other fees a self-insurer must pay?

Yes. Obligations under the Workers’ Compensation Act include the timely payment of benefits due injured employees as well as required assessments to the Self-Insurers Security Fund, Rate Adjustment Fund, Second Injury Fund, and Commission Operations Fund. (See Workers’ Compensation Act, 820 ILCS 305/4a-7, 305/4d, 305/7f, 310/7f.)

What security is required?

Commission rules set forth security requirements and how security is determined. (See Commission Rules, Section 7100.70 (c)(3).) Each year upon application for renewal of the self-insurance privilege, the security requirement is evaluated and may be adjusted if necessary based on new information in the renewal application. The Board has set the minimum security requirement at $200,000. An employer that has been self-insured for a minimum of three consecutive years and earns a total score of 18 on the financial ratios for three consecutive audited years is not required to furnish security.

What form of security is acceptable?

The Commission accepts surety bonds, letters of credit and deposits under escrow agreements. Deposits under escrow agreements shall be cash, negotiable United States government bonds or negotiable general obligation bonds of the State of Illinois.

Is excess insurance required?

It is optional unless the Chairman requires that a self-insurer further secure payment of liabilities under the Act by obtaining a policy of excess liability or catastrophe insurance. If the self-insurer obtains such excess insurance, it must submit a Certificate of Excess Insurance to the Commission.

Can an employer insure a portion of its operations with an insurance carrier and self-insure another, separate portion?

Yes, provided that the entire compensation liability of the employer to employees working at or from one location shall be insured by one such insurance carrier or shall be self-insured.

Is a parent guarantee agreement required?

Yes, a subsidiary or controlled employer must submit a guarantee agreement, executed by the parent or controlling person(s), which guarantees the obligation of the subsidiary or controlled employer (See Commission Rules, Section 7100.70(c)(4).

How are claims administered?

On its initial and renewal applications for self-insurance, an employer must indicate how its workers' compensation claims will be administered.

An employer may self-administer its claims or contract with a service company. If an employer contracts with a service company a copy of the contract must be submitted to the Commission. In servicing claims, the employer or service company must provide adequate facilities for the investigation, administration and payment of claims. In determining adequacy, the Commission looks to whether there is personnel experienced in the adjudication of workers' compensation claims; whether a reporting system exists; whether the reporting system is automated the frequency of reports and the response system to claim filing.

What companies have received permission from the Commission to self-insure?

Click here to obtain the list of individual, private, parent companies that the Commission has authorized to self-insure, pursuant to Section 4(a) of the Illinois Workers' Compensation Act. Please note that subsidiaries do not appear on this list. Contact the Commission's Self-Insurance office to verify the status of a subsidiary.

Can the self-insurance privilege be terminated?

Self-insurance can be denied or terminated because an employer fails to demonstrate the financial strength to meet its self-insurance obligations.

Other reasons that are cause for termination:
- failure to file the renewal application and renewal fee as required;
- failure to comply with a notice of conditional approval letter;
- failure to furnish required security;
- failure to replace canceled security;
- failure to provide a parent guaranty; and
- failure to comply with a request of additional information.

What if an employer wishes to leave the self-insurance program?

A self-insured employer may voluntarily terminate the self-insurance privilege with notice to the Commission. The Commission will issue a notice terminating the privilege on a date certain upon receipt of evidence of workers' compensation insurance coverage. The employer is required to provide for the continuation of payment of current and future claims that occurred during the self-insurance period and maintain security for the length of time sufficient to guarantee the payment of those workers' compensation obligations. Also, the employer will be required to continue to pay assessments into the Self-Insurers Security Fund, the Second Injury Fund and the Rate Adjustment Fund on workers’ compensation benefits paid for injuries that occurred while self-insured.

What self-insured companies have become insolvent recently?

 

SELF-INSURED  EMPLOYERS THAT BECAME INSOLVENT SINCE 2000
Company	Dates of Self-Insurance	Claims Administrator	Contact Person
Allied Products Corp. dba Verson Steel Update Bankrupt 10/2/00	8/1/86 - 12/1/00	Illinois Self-Insurers Advisory Board (ISIAB)	All claims have been closed.
Birmingham Steel Corp. Bankrupt 6/3/02	7/1/82 - 12/8/02	ISIAB	Greg Davis   217/557-9254
Briskin Manufacturing Co. Bankrupt 2/20/01	2/1/71 - 3/28/01	ISIAB	Greg Davis 217/557-9254
Calumet Steel Co. Bankrupt 3/18/02	4/1/76 - 4/1/02	ISIAB	Greg Davis 217/557-9254
Capital Engineering and Manufacturing Co. Bankrupt 8/11/06	3/9/79 - 9/30/06	Cambridge Integrated Services	312/381-8285
Castwell Products, Inc. Bankrupt 9/18/04 Emerged from bankruptcy 5/24/05	5/28/97 - Present	Helmsman Mgmt. Serv.
Consolidated Freightways Corp. of Delaware Bankrupt 9/3/02	11/8/59 - 9/30/96	Sedgwick Claims Mgmt. Serv.	Mandy Triska 888/777-7039
Chicago Extruded Metals (CXM) Group Bankrupt 7/3/03	1/1/64 - 5/31/03	ISIAB via Employers Claims Service	Phil Arnold 847/680-3196
Dana Corporation Bankrupt 3/3/06	6/1/94 - Present	ITT Specialty Risk Services	John Serra 800/358-2072
Ganna Construction Bankrupt 8/17/06	5/1/01-5/1/02	ISIAB	Greg Davis 217/557-9254
H & W Motor Express Co. Bankrupt 6/12/02	1/1/83 - 12/31/01	ISIAB	Greg Davis 217/557-9254
Heinemann's, Inc. Bankrupt 7/19/05	4/28/86 - 7/15/05	ISIAB via Cambridge Integrated Services	Tom Cappellin 312/381-8285
Illinois Forge, Inc. Bankrupt 9/17/07	6/13/77 - 4/9/99	ISIAB	Greg Davis 217/557-9254
Ingersoll International, Inc. Bankrupt 4/22/03	12/1/52 - 4/1/02	ISIAB	Greg Davis 217/557-9254
K & R Express Systems, Inc. Discontinued operations/executed assignment 3/26/04	8/1/92 - 3/26/04	ISIAB	Greg Davis 217/557-9254
Keystone Consolidated Industries, Inc. Bankrupt 2/26/04 Emerged from bankruptcy 8/31/05	1/1/59 - Present	Cannon Cochran Mgmt. Serv.
Kmart Corp. Bankrupt 1/22/02	3/29/43 - 9/22/02	Cambridge Integrated Services	800/637-8106
LTV Steel Co. Bankrupt 12/29/00	12/5/38 - 12/31/01	ISIAB	Greg Davis 217/557-9254
National Steel Corp., Granite City Div. Bankrupt 3/6/02	7/17/43 - 5/19/03	Gallagher Bassett Serv.	Bev Reed 314/800-0400
Northwestern Steel & Wire Co. Bankrupt 12/19/00	8/1/65 - 6/15/01	ISIAB	Greg Davis 217/557-9254
Old Ben Coal Co. Bankrupt 11/13/02	1/1/74 - 1/30/01	ISIAB	Greg Davis 217/557-9254
Ready Metal Manufacturing Co. Bankrupt 5/13/05	1/15/86 - 5/13/05	ISIAB	Greg Davis 217/557-9254
Roberson Transportation Services, Inc. AKA CX Roberson, Inc. AKA PFT Roberson, Inc. AKA Mystic Leasing Co. Bankrupt 1/21/05	5/1/95 - 1/21/05	ISIAB	Greg Davis 217/557-9254
Spiegel, Inc. Bankrupt 3/17/03	1/1/56 - 9/30/02	Eddie Bauer Mgmt.	Alicia Johnson 425/755-6100
St. Elizabeth Medical Center Bankrupt 2/21/03	9/1/92 - 1/1/02	Safety National Casualty	Mark Walls 314/995-5300 x257
Turris Coal Co. Bankrupt 11/13/02	4/1/83 - 1/30/01	ISIAB	Greg Davis 217/557-9254
United Airlines, Inc. Bankrupt 12/9/02 Emerged from bankruptcy 2/1/06	1/1/72 - Present	Gallagher Bassett Serv.
UNR Industries Bankrupt 9/19/03	11/1/70 - 11/1/97	Cambridge Integrated Services	All claims have been closed.
USG Corp. Bankrupt 6/25/01 Emerged from bankruptcy 6/20/06	8/1/82 - present	Gallagher Bassett Serv.
Wagner Castings Co. Bankrupt 9/29/04	8/26/58 - Present	NovaPro Risk Solutions	Wanda Perlinski 312/960-9273 x226

How do I obtain more information?

Email the Office of Self-Insurance Administration

or call or write

701 S. Second St.
Springfield, IL 62704
(217) 785-7084

100 W. Randolph St., 8th floor
Chicago, IL 60601
(312) 814-6065