State Compensation Insurance Fund is issuing dividend payments to eligible policyholders—the first time in a decade. The $50 million dividend disbursement began in July 2012 and will be paid to qualifying policyholders 18 months after their 2011 policy inception date.
As a self-supporting, not-for-profit public enterprise that provides workers’ compensation insurance to California employers, State Fund is, at times, able to return surplus funds to its policyholders. Based on projected financial figures for 2011, State Fund’s Board of Directors determined that assets exceed liabilities and necessary reserves, resulting in a surplus of approximately $50 million, which is being returned to qualifying State Fund policyholders in the form of a dividend.
“We believe the dividend can and should function as a way to return value to responsible policyholders; it is a down payment on our commitment to help California employers manage the cost of their workers’ compensation insurance,” said Tom Rowe, State Fund President and CEO.
To qualify for a dividend, 2011 policyholders must:
Following discussions with the California Department of Insurance (CDI), our Board of Directors amended the dividend plan to include non-renewing policies as potentially eligible.
The dividends are calculated at 5.2 percent of each qualifying policyholder’s Estimated Annual Premium (EAP) at inception of the 2011 policy year.
State Fund will issue dividend checks by order of policy inception dates. These checks will be mailed to eligible policyholders approximately 18 months from their policy inception dates of the 2011 policy year.
All policyholders will receive a Dividend Result Disclosure Statement (DRDS), explaining whether or not they have been deemed eligible for a dividend and why. Those eligible will receive their check enclosed with the DRDS.State Fund last declared a dividend in 2001, which was more than $92 million. Since its inception in 1914, State Fund has paid more than $4.9 billion in dividends to policyholders—a record unparalleled among all California workers’ compensation carriers.
EDITOR'S NOTE: Under California law it is unlawful for an insurer to promise the future payment of dividends under an unexpired workers' compensation insurance policy or to misrepresent the conditions for dividend payment. Dividends are payable only pursuant to conditions determined by the Board of Directors or other governing board of the Company following policy expiration. It is a misdemeanor for any insurer or officer or agent thereof, or any insurance broker or solicitor, to promise the payment of future workers' compensation dividends. Past dividend performance is no guarantee of an insurer's future dividend performance.