The South Carolina House Ways and Means Committee has approved a budget proviso to eliminate the state’s Second Injury Fund (SIF) and appropriate $40 million of the monies remaining in the fund to the state’s general budget.
“Although we support the repeal of the SIF, we believe the money that has already been contributed by the insurance industry should be retained in the fund to pay claims,” Robert Herlong, Southeast regional manager of the Property Casualty Insurers Association of America (PCI), commented. “Otherwise, there is likely to be a double assessment on the industry.”
PCI has been working for several years with the Department of Insurance and others in the industry to repeal the Second Injury Fund. Insurer assessments have increased dramatically in recent years, up to $133.3 million in fiscal year 2002-2003, or 13 percent of workers’ compensation premium in South Carolina.
The proviso seeks to shut down the fund to new claims on July 1, 2004, after which the Department of Insurance would oversee the runoff of existing claims until all obligations are paid. The proviso would also replace the current 175 percent assessment formula with one for 110 percent.
“PCI applauds the action to repeal the fund, but we object to the diversion of its monies to the state budget,” Herlong said. “These funds should be used to pay claims during the runoff period to prevent additional assessments on the industry. In the long run these additional assessments will be paid by all businesses which carry workers’ compensation insurance. If the state’s budget is in crisis, then the problem should be addressed head-on instead of indirectly through an unfair assessment against the business community.”
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