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WHY SCIF GREW

Dear Editor:

However, the root cause of SCIF's sudden growth had little to do with their pricing, marketing, or any monopoly. It had everything to do with the number of California workers' comp insurers that went bankrupt or left the state during that period due to the legislature's profligate increases in workers' comp benefits and its employer-hostile legislation.

I recall presenting evidence to the then chairman of a senate committee in 1997 regarding the net effect of the legislature's prior actions which was causing 30 percent annual increases in my school district's workers' comp loss costs. I was essentially told, "So what?"

SCIF is needed because there must be an insurer of last resort. That is exactly how SCIF obtained their enormous market share, because the commercial insurance industry had left California. And who could blame them? In that regard, SCIF has served California well.

Having said that about SCIF, I confess, I've administered selfinsured WC programs for over 20 years and never placed business with SCIF.

Steve Somsen

Risk Manager

Sacramento, Calif

RISK EXECS IGNORED

Dear Editor:

As a very busy risk manager I am a little behind in my reading.

However, I was shocked to read Tom Slattery's article titled "Buyer, Seller Lobbies Far Apart Over Bid-Rigging Scandal." (Risk & Insurance®, March 2005, page 12).

While the Risk and Insurance Management Society Inc. may accurately be labeled a trade group, it, in my opinion, does not represent the interests of commercial insurance buyers. If it did, its response would not have been deemed "tepid."

In my opinion, there is no trade group that solely represents the interest of insurance buyers. If such a group existed, the response would have been one of "unbridled outrage."

I believe that the vast majority of risk managers would agree that a broker's receipt of contingent commission (in any form and with any label attached) represents an absolute conflict of interest. I believe that same group of risk managers wants to see the payment and acceptance of contingent commissions prohibited, and if necessary, by law.

Unfortunately for concerned risk managers and buyers of insurance, RIMS continues to advocate greater disclosure and transparency only. Slattery's conclusion in reference to buyers was much like that of "former" N.Y. Insurance Commissioner Gregory V. Serio, in that neither saw, nor heard nor felt the wrath of insurance buyers thanks to the "tepid" response from RIMS.

Ken Breyley

Director of Risk Management

Wadsworth, Ohio

June 1, 2005

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