The Second is a Self-Insured PEO Only two PEO’s in CA have this distinction.

The Self-Insured PEO provides all the services of a deductible PEO with the addition of the protection afforded due to regulation by the CA Department of Labor and CA Department of Insurance under the CA Labor Codes.

The Self-Insured PEO has a certificate from The CA Department of Industrial Relations certifying that they have applied, made the deposits and met all other requirements to be self-insured in CA.

*CA Labor Codes 3700-3706 describe a Self-Insured Company. In additional all other Labor Codes apply.

The Client Company is the Insured under the Self-Insured PEO through the PEO agreement.

The Self-Insured PEO is required to use a Third Party Administrator (TPA) to administer their claims.

*In addition a Health Care Organization (HCO) is used to take advantage of other laws beneficial to managing Workers’ Compensation Claims. If the Client Company offers Non-Occupational Health Insurance Coverage to their employees and pay 50% or more of the employees premium, the Client Company can control primary medical on Workers’ Compensation Claims for 180 to 365 days based on the circumstances following the rules of CA Labor Code 4600.3.

The Self-Insured PEO reports and reserves for their losses similar to an Admitted Insurance Company.

The Self-Insured PEO pays into the Self Insured Guarantee Fund similar to the fund Admitted Insurance Companies are required to pay into in case of insolvency.

The Self-Insured PEO protects itself from catastrophic loss with Excess Insurance Coverage from a CA Admitted Carrier.

The Experience Modifier is used to calculate the initial premium and the Client Company will not have an Experience Modifier while under the Co-Employment agreement with the Self-Insured PEO.

*A Client Company leaving the Co-Employment Agreement of the Self-Insured PEO will be afforded the use of the California Workers’ Compensation Uniform Statistical Reporting Plan, Supplement, Rules and Interpretations, Page 29, Self Insured Data For Experience Rating Purposes, to have their losses presented to the WCIRB for review and if accepted, have their experience modifier calculated. (Appendix B page 32)

A sampling of Companies who left Self-Insured status and a sampling of Client Companies who left a Self-Insured PEO and went back to the general market for Workers’ Compensation Insurance showed that in every case reviewed the rule was applied and the Experience Modifier was calculated. This was not a complete study of all companies who left Self-Insured status. A company with high losses, leaving Self-Insured status would not want the rule applied and would of course settle for the 100% Experience Modifier in the general market. Only those companies who have good loss ratios (Credit Mod) would need to have the rule applied.