(WBNG Binghamton) New York Governor Andrew M. Cuomo on Friday announced New York State issued $370 million in bonds to assist businesses in failed group self-insured trusts fulfill their obligations to their injured workers.
According to a news release:
The bonding is made possible in Governor Cuomo’s 2013 Business Relief Act, which authorizes the Workers’ Compensation Board to use the proceeds to purchase insurance to pay the claims of these injured workers; the employers will repay the cost of insurance under favorable terms.
“Through the 2013 Business Relief Act, the State is providing a practical and affordable way for thousands of businesses to meet their responsibilities so that injured workers can receive the compensation they deserve,” Governor Cuomo said. “Employees who are hurt on the job are rightfully entitled to their workers’ compensation benefits, and the bonds issued by the State will provide financial assistance for employers to meet those needs. We are pleased to work side by side with the business and labor communities so that all New Yorkers are covered.”
The bonds, issued through the Dormitory Authority of the State of New York, received the highest possible credit ratings from Moody's, Standard & Poor’s and Fitch. Lead bank Siebert Brandfort Shank, a certified Minority and Woman-Owned Business Enterprise (MWBE), and Goldman Sachs brought the bonds to market. The bonds are free of New York State and city taxes.
The NYS Workers’ Compensation Board will use the bond proceeds to purchase insurance policies that will pay the claims of injured workers because those employers – members of insolvent group self-insured trusts – abandoned their claims. The businesses in these trusts will reimburse the Board for the cost of these “assumption of liability policies” over 10 years, at low interest rates. By Dec. 31, 2013, the Board will finalize the insurance policy purchase on behalf of the two largest defaulted group trusts, the Healthcare Industry Trust of New York and the Healthcare Providers Self Insurance Trust. Additional proceeds can purchase insurance policies for group trusts that refused to meet their claim obligations and whose claims the Board now administers. The Business Relief Act of 2013 authorizes up to $900 million in bonding capacity.
Transferring claims to insurance companies provides for the payment of benefits to injured workers; currently, the Board pays their claims and is engaged in legal proceedings to recoup those costs. The insurance does not relieve trust members of liability, but it does create a clear and lower-cost mechanism for employers to meet their obligations toward their injured and ill employees. Assumption of liability insurance also caps the cost of these claims for employers, at a favorable price.