Four California extruder-converter firms have tackled the venomous issue of workers' compensation insurance.
Weary of spiraling rates, the companies established the nonprofit Plastics Manufacturers Self-Insurance Program of California Inc., effective Jan. 1. All California plastics processors can apply to enroll. The program emulates self-insured industry groups that have existed for many years in New York and Pennsylvania.
``Essentially, we will not take an increase this year,'' said Kevin Kelly, chief executive officer of Emerald Packaging Inc. in Union City, Calif. Using self-insurance during 2004 will save Emerald $100,000, or about 30 percent, compared with the cost of the firm's traditional coverage.
``As the group gets bigger, we may bring down the costs significantly,'' Kelly said.
The program's directors include Kelly and three other California executives: Robert Berman, chairman of Roplast Industries Inc. in Oroville; Albert Halimi, executive vice president of Command Packaging in Vernon; and Bob Gutterman, chief financial officer of Crown Poly Inc. in Huntington Park. Three board positions remain open.
Three groups serve the plastics program: Compensation Risk Managers Inc. of Poughkeepsie, N.Y., administrator; CompLink Inc. of Irvine, Calif., marketing services; and Matrix Absence Management Inc. of San Jose, Calif., claims processing.
Workers' compensation insurance remains a critical California issue with a probable November ballot issue in the offing.
``Our best guess is that the pain will remain for the next two to three years regardless of changes to the system,'' said John F. Monroe, CompLink president. Monroe also is a managing partner with insurance brokerage SullivanCurtisMonroe of Irvine.
California firms have experienced ``50 percent [rate] increases year in and out,'' Monroe said. Since 1995, several factors have contributed to the problem for all California employers, including rate deregulation, carriers withdrawing from the state and an overload on the last-resort state fund.
California has other self-insured programs, including two for automotive dealers, two for contractors and one each for truckers and operators of assisted-living centers.
In New York, about 25 percent of workers' compensation coverage is self-insured, according to CompLink.