Two N.Y. Workers’ Comp Trusts to Close as Board Toughens Standards

January 2, 2006

Two of New York’s 70 workers compensation self-insurance trusts are being shut down for their inability to meet financial standards set by state officials.

The two trusts are the Provider Agency Trust for Human Services and the Manufacturing Industry Workers Compensation Self-Insurance Trust, according to Jon Sullivan, spokesman for the New York State Workers Compensation Board, which monitors these entities. The two will be terminated in March.

Sullivan said there was “mutual agreement” between the WCB and the administrators of the trusts to take the action.

Both trusts are managed by Consolidated Risk Services, a Wayne, Pa. subsidiary of AVI International, Inc., which specializes in workers compensation program administration and claims management.

Consolidated Risk Services did not return a call from Insurance Journal seeking comment.

According to Sullivan, self-insured trusts in the state have been under closer scrutiny since 2001 when the WCB adopted stricter financial and claims requirements and began keeping a closer eye on funding levels in all plans.

“It is not unanticipated that light would be shown on some trusts as a result of these new financial standards,” Sullivan said. “We look at these as making the system stronger in the long run.”

He said officials had been working with administrators of the two funds that are being closed for several years before concluding that the “better business decision” was to terminate them.

While they are the first to be shuttered as a result of the new financial standards, Sullivan said there remains a “handful” of others the WCB is monitoring closely.

Employers in the trusts that are closing will now have to seek new coverage, either through private carriers or the New York State Insurance Fund.

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