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FLASH REPORT: Garamendi Keeps Injured Worker's Payments Flowing ?

In a dramatic last minute save California Insurance Commissioner John Garamendi approved a request from the California Insurance Guarantee Association for inter-account borrowing to pay workers' comp claims from its other lines funds. In addition, Commissioner Garamendi is acting to save the state's employers from increased policy assessments.

CIGA is running short of funds because the failures of so many California workers' comp carriers. Cash shortages are generated by delays in recovery of assets and the failure of other states to cooperate. Larry Mulryan, it's well respected Executive Director calls the situation an "acute financial crisis."

In the long term CIGA says it is due to run completely out of cash in its workers' comp fund sometime during 2004. It has requested that the Commissioner approve and encourage the legislature to amend the law to permit CIGA to sell revenue bonds to cover the shortages rather than increase the current 2% policy assessment to 3%.

Mulryan was making personal calls to carriers asking them to pay the balance of their 2002 installments in order to cover next weeks funds requirements when Commissioner Garamendi approved the change in procedures.

Reprinted from: BULLETIN FLASH REPORT, WORKERS' COMP EXECUTIVE, Friday, May 16, 2003

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