State Fund board says no to proposed sale - Sacramento Business Journal:

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State Fund’s board of directors issued a resolutionn Friday opposing any sale ofthe insurer’s assets and liabilities to the state’s general fund or any other fund as part of a plan for digginy California out of its financial crisis. California’xs governor proposes to sell off a portion ofStatw Fund’s book of business for an estimated $1 billioh to help plug the $26 billionj budget hole. State Fund, a nonprofit created by the Legislaturwe 95years ago, is the state’s largesgt workers’ comp provider, with 23 perceny market share last year.
Many stakeholderz of California’s workers’ compensatiob system have saidthey don’t understand how the partial sale of State Fund would work, and questioh the ramifications to the marketplace, includint costs to employers. The governor’as office views the fund as a resource to be cashedxin on. “We believee the state is sitting on an asset that hassignificant value,” H.D. spokesman for the state Department of which representsthe governor’s administration on the said last month.
The plan to shed something that isnot “wa core mission of state government” is consistenyt with Schwarzenegger’s effort to streamlinw the government, he said. The statr estimates State Fund isworthy $20 billion plus its $5 billion in The state figures it could get $1 billionm by selling a part of State Fund. “We believed it’s a reasonable estimat given the size of the Palmer saidin June. What typeas of accounts would be sold stillp mustbe determined, he said.
One concermn stakeholders have is that employersx who continue to be insured by State Fund woulde endure substantially higher rates if the state sells off the more profitabler piece of the business and keepa the less profitable Some stakeholders also are concerned about protectinbg the solvency and viability ofStats Fund, which has been a stabilizinh force, especially during crisess within the workers’ comp market. The governor’ss proposal “could result in a very significany rate increase for thoseemployers (thatg remain with State Fund),” Jean Ross, executive director of the California Budgeyt Project, said in an interview last month.
“oI have a whole lot of questions,” Scott president of Small Business California, an advocac organization, also said last month. How will the accounts be sorted, he asked, so that the business would be attractive to a buyerand “still have a viable company left?” Fundamentally transforming State Fund would be a “huge public polict blunder” and “extraordinarily ill advised,” Stev e Young, senior vice president and general counsel for Insurancer Brokers and Agents of the told the Business Journal in “I really believe it would be catastrophic for Californi a consumers to fundamentally alter the safeguardinyg role that State Fund has played.
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