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 290 in FY08.
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
Note:
If a company emerged from bankruptcy, it was removed from
this list.
|
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 Group
|
Karen
Klimek
312/381-8216 |
Consolidated
Freightways Corp. of Delaware
Bankrupt 9/3/02 |
11/8/59
- 9/30/96 |
Sedgwick
Claims Mgmt. Serv. |
Crystal
Gefre
503/412-3928 |
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 |
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 Group |
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 |
Kmart
Corp.
Bankrupt 1/22/02 |
3/29/43
- 9/22/02 |
Sears
Management |
Kathryn
Van Den Heuval
847/286-8679 |
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 |
Royal
Crown Bottling Co. of Chicago
Voluntary liquidation 12/31/05 |
2/1/64
- 12/31/05 |
Cambridge
Integrated Services Group |
Karen
Klimek
312/381-8216 |
Spiegel,
Inc.
Bankrupt 3/17/03 |
1/1/56
- 9/30/02 |
Eddie
Bauer Mgmt. |
Sandra
Jones
425/755-4731 |
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 |
UNR
Industries
Bankrupt 9/19/03 |
11/1/70
- 11/1/97 |
Cambridge
Integrated Services Group |
All
claims have been closed. |
Wagner
Castings Co.
Bankrupt 9/29/04 |
8/26/58
- 12/31/05 |
NovaPro
Risk Solutions |
Kathy
Johnson
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
|