Stronger, Easier to Do Business, and More Customer-Focused:
A Message from State Fund Interim President and CEO Doug Stewart

As we settle into 2010, I want to extend my thanks for your support of our organization, provide a quick glimpse as to our 2009 results, and bring you up to date regarding a number of exciting initiatives under way at State Fund. Since becoming Interim President and CEO in October, my leadership team and I have continued working on a number of initiatives that strengthen our solid capital base while building out additional service capabilities.

Financially Strong

In 2009 State Fund continued to strengthen our balance sheet and added to policyholder surplus. I am particularly pleased with our financial results given the challenging times for our economy and our industry. State Fund is working through this downturn by doing what we have always done—focusing on the fundamentals of our business and providing California’s businesses with a strong and stable choice for workers’ compensation insurance. Once we have completed our 2009 regulatory filing, I will send you a separate note with our financial and operating results.

Easier to Do Business

To go along with our rock-solid financials, we have been busy reshaping our operations and making it easier for you and your clients to do business with us. We listened to your feedback during visits to your offices, Broker Advisory Council meetings, and our State Fund Product Fairs last fall. Based on that input, we began a number of service and technology initiatives, such as expanding our electronic broker interface and making our billing and payment system easier to understand. You can read more about two examples of these customer-focused initiatives elsewhere in this newsletter: Straight Through Renewals processing and Bill Resolution Units.

Hope for the Future

Although the current economic recovery may stretch well into 2011, I continue to be very optimistic about California’s future and State Fund’s ongoing vital role in the state. I’m especially pleased to continue being the primary market for the Golden State’s key economic engine that will lead us out of this economic trough: small business.

Thanks also for your calls and notes. I’m very pleased to be leading this organization at this time and hope to see many of you during 2010.

— Doug Stewart, CPCU
Interim President and CEO

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Introducing Faster, Easier Online Renewals

State Fund's new Straight Through Renewal process speeds up and streamlines your client policy renewals. We created this online tool to make it easier for you to review and approve renewals and update your clients’ policy information.

When a client’s policy is approaching its renewal date, you will be prompted to log in to the user-friendly renewal function on State Fund Online.

If there are changes, you can update the information online, and in many cases you will immediately receive a revised renewal quote. Policies with more extensive changes will be routed to your underwriter for review.

In either case, the renewal process should be much faster and easier than before, saving your brokerage valuable time.

After testing the Straight Through Renewal process with brokers to optimize usability and connectivity, we have launched it for your upcoming renewals. For more information, please watch for additional State Fund e-mail communications, or feel free to contact your State Fund marketing representative.

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Faster Resolution of Audit and Billing Disputes

State Fund has implemented new Bill Resolution Units to advance our goal of delivering the best customer service to you and your clients. These Bill Resolution Units, located in each of our statewide regions, provide a single point of contact for audit and billing issues that may arise with your clients’ policies. As a result, we should achieve faster resolutions—60 days or less from the time we learn of a dispute—which will save you time and work.

Our Bill Resolution Unit staff consists of senior-level audit specialists who can get to the bottom of disputes reported through our Customer Service Center or regional offices. Their expertise and a clearly defined workflow will assure you and your clients of fast, fair resolutions as well as consistency and accountability.

Pre-Audit Service Calls

The Bill Resolution Units are initiating another important function: education and training for new accounts. Within 90 days of policy inception, many new State Fund clients will receive a visit from one of the Bill Resolution Unit’s audit specialists. This meeting will present an opportunity to review proper payroll reporting and record keeping and to verify policy information such as operations and classifications. By helping clients pay the right premium throughout the policy term, we can reduce the chance of a large bill or refund following a year-end audit.

Here are a few other reminders for brokers about our Bill Resolution Units:

• Through proactive engagement and efficient management of billing disputes, we will make things easier for you and your clients. In particular, this process may help reduce policy cancellations, coverage lapses, and time-consuming rewrites.
• If one of your clients qualifies for a pre-audit, you will receive a copy of the letter requesting an appointment.
• If you have audit or billing issues to bring to our attention on behalf of a client, you may continue to do so by contacting your State Fund servicing office or our Customer Service Center.

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New Look, New Name for State Fund Web Site

If this issue of Broker Update Online marks your first visit to the refreshed State Fund Web site, welcome aboard to statefundca.com. We’ve spruced up the site’s look and feel with a vibrant color palette, more pictures, and an improved interface that better serves our customers and site visitors.

As a broker, you will find that the new site is intuitively organized so you can get to the information you use the most. Whether you need to download a form for a client, locate safety materials, or read Broker Update Online and other articles for brokers, the site makes the content easy for you to access and navigate.

The new site also gives you a seamless integration with State Fund Online. You can log in to do business on State Fund Online from the home page or anywhere in the broker section.

The FYI on the URL

As part of our site relaunch and brand focus, we have migrated our Web address to www.statefundca.com. You may want to update your bookmarks for your preferred pages on statefundca.com, but even if you don’t, entering any scif.com address will automatically redirect you to the new site. Also, State Fund e-mail addresses are remaining under the scif.com domain for the time being.

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About That New Surcharge on Your Clients' 2010 Policies

You may have noticed a new Labor Enforcement and Compliance (LEC) surcharge on your clients’ workers’ compensation policies. This surcharge funds activities of the Division of Labor Standards Enforcement (DLSE), an agency that works to ensure compliance with labor regulations in areas such as working conditions and wage and hour standards.

The LEC surcharge assesses premium at a rate of 0.1924 percent for all California workers’ compensation policies incepting on or after January 1, 2010. The surcharge appears on quotes and premium bills for 2010 policies and is also factored into your clients’ interim billing rates.

In implementing the LEC surcharge, the Department of Industrial Relations is continuing its legislatively mandated shift toward user funding of certain institutions, including Cal/OSHA and the Workers’ Compensation Appeals Board. The state budget that was enacted in July 2009 established the LEC surcharge as a DLSE funding source through July 1, 2013. The LEC surcharge effectively replaces DLSE funding that had previously come from the state General Fund.

As a result, the LEC surcharge is taking its place alongside the six existing surcharges on client premium bills:

• California Insurance Guarantee Association (CIGA)
• Workers’ Compensation Administration Revolving Fund (WCA)
• Workers’ Compensation Fraud Assessment (WCFA)
• Uninsured Employers Benefits Trust Fund (UEBT)
• Subsequent Injuries Benefits Trust Fund (SIBT)
• Occupational Safety and Health Fund (OSHF)

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Changes in Tow: Making Sense of the New Tow-Truck Classification

If you have clients in the automotive field who have tow-truck operations, you should know that California has a new towing-specific classification. As of January 1, the Workers’ Compensation Insurance Rating Bureau (WCIRB) implemented Classification 7227 for businesses engaged in “automobile or automobile truck towing, roadside assistance, or freeway service patrol.” What it means for your clients is the possible reassignment of their towing operations and all or a portion of their covered employees to Code 7227.

Previously, tow-truck operations were considered part of either the relevant automotive-related classifications—among them, Codes 8387 (service stations), 8389 (repair shops), 8391 (dealers), 8392 (parking garages/storage), and 8393 (auto body repair shops)—or Code 7219 (trucking). However, the WCIRB determined that “the Towing, Roadside Assistance, and Freeway Service Patrol industry constitutes a distinct and identifiable industry of sufficient size to generate a statistically credible pure premium rate.” Generally, the new Code 7227 carries a higher rate than the automotive classes, but is lower-rated than 7219.

How It Affects Your Clients

It may take some time before it is clear what actual impact this change has on a specific client’s workers’ compensation policy. Some points to consider:

• Identifying whether all or part of a client’s operations qualify for Code 7227 will require the review of an underwriter or auditor, and may require review by the WCIRB.
• Clients whose entire operation is reassigned to Code 7227 may also see a lowering of their experience modifications, with past payroll and claims reassigned to 7227.
• State Fund offers group insurance through the Tow Plus Municipal Tow Services Association (Group 937) to qualifying accounts. Among its many benefits (including a 6 percent premium discount), this group is helping member businesses sort out the new classification and can serve as a valuable resource for your clients that qualify. You can get more information about the Tow Plus group via the Group Lookup tool on State Fund Online.

If you have questions about Code 7227’s potential effect on your State Fund clients, please contact your State Fund marketing representative.

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Marketing Materials Now Available on State Fund Online

Many of our broker partners regularly log in to State Fund Online to manage their book of business. Now we’re putting helpful sales and marketing resources within easy reach of your State Fund Online access. On the upper right of your Welcome page, select Info > Communications > Broker Communications, and you will see a listing of marketing materials that you can download and print.

These one-page marketing materials quickly give you the information you need to communicate the benefits of State Fund services to your clients. You can choose from such topics as:

• Group insurance
• Claims reporting and management
• State Fund Online
• Loss control services
• Discounts and credits
• State Fund’s financial strength

Adding marketing materials to State Fund Online’s broker interface represents another way we are working to help you sell State Fund to your clients. Be sure to take a look the next time you log in.

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News Travels Fast: Get Broker Update Delivered to Your Inbox

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