FOR IMMEDIATE RELEASE
OSIP Newsline No. 06-12
July 2, 2012
California's Alternative Security Program puts $6.17 Billion
Back into Businesses
Sacramento - Christine Baker, director of the Department of
Industrial Relations (DIR), today approved the implementation
of the 2012/13 Alternative Security Program (ASP), freeing
$6.17 billion in capital, giving self-insured California
businesses greater financial flexibility.
The ASP is a first-in-the-nation, innovative program operated
by the non-profit California Self Insurers' Security Fund
with the California Department of Industrial Relations. The
program provides guarantees to replace security deposits
required to collateralize self-insured workers' compensation
"Self-insurance and the ASP are innovative ways that
California can support businesses and help them reinvest
capital back into growing their business," said DIR Director
Christine Baker. "With workers' compensation representing a
major expense to businesses, this program benefits both the
businesses and the larger California economy in a meaningful
and positive way."
All employers in California are required to have workers'
compensation insurance to protect themselves and workers and
minimize the impact of work-related injuries and
illnesses. Meeting this requirement can be accomplished
either by buying an insurance policy, or through obtaining
authority from the DIR Office of Self Insurance Plans (OSIP)
to self-insure the businesses' workers' compensation
"I'm surprised that there are not more employers taking
advantage of self-insurance," said OSIP Chief Jon Wroten.
"While there are standards and requirements that must be met,
for employers with sound risk management practices the
benefits can be substantial to the firm's bottom line."
Traditionally, self-insured employers are required to
maintain a deposit to collateralize their risk in the amount
equal to 135 percent of estimated future Liability. This
deposit, which is cash, irrevocable letters of credit,
securities or surety bonds, limits the employer's ability to
use the cash or credit line to expand their business. In
contrast, ASP members can apply that cash or line of credit
back into their businesses while the ASP assumes
responsibility of the security deposits.
California currently has 7,952 employers protecting more than
4 million workers representing a total payroll of $173
billion through self-insurance workers' compensation
plans. One of every four California workers is protected
by a self-insurance plan.
Self-insured employers in California represent large and
midsized private companies, industry groups, and public
entities such as city, county, state and school districts.
More information of California's workers' compensation
self-insurance program is available on OSIP's website
accessible at http://www.dir.ca.gov/sip.