California Workers' Comp Plan Just About Ready

A new workers' compensation insurance program for California racing might be implemented by Nov. 15, according to the head of the state trainers' association.

Ed Halpern, executive director of the California Thoroughbred Trainers, said
the start-up date--when insurer American International Group can actually begin administering policies for trainers who have committed to the program--depends on when the insurer clears up its paperwork backlog.

"We're hoping to get the field paperwork completed by Nov. 15," he said. "Everything seems to be falling into place."

The program was first presented in September. Since then, Halpern and others involved in the issue have been meeting with horsemen to get their commitment and initial paperwork detailing employment and claim information completed.

American Insurance Group required an unspecified percentage of the top training operations to commit to the plan. Halpern said the insurer is satisfied with the participation level. He declined to say what percentage of the leading stables is committed to the program or give the approximate statewide premium amount.

"There are a number of brokers handling that, so I don't know the exact figures," Halpern said. "But they tell me we have enough."

One broker, John Patrick Unick, national sales manager for Maroevich, O'Shea and Coghlan of San Francisco, estimated the total statewide premium to be worth about $15 million. He said there are about 500 training operations in the state that he would expect to join the program.

According to numbers provided in September, trainers can expect about a 30% decrease, on average, in their premium rates. Those rates have jumped drastically since March 1, when many stables could no longer find a private insurer willing to take on the catastrophic type of coverage California requires.

Since then, almost all of the stables were forced to turn to the government-backed State Fund for their workers' comp needs. The basic rate (before deductions for clean records) is nearly $50 per $100 of payroll, and is expected to increase even more this year. As a result, a number of trainers have been forced out of business or have cut back operations severely, Halpern said.

There are two groups of trainers among the 500 in the state, those who signed up with the State Fund last March, and those who followed when their old policies expired July 1. Unick said trainers who signed up with the government program July 1 would benefit the most, at least initially, by switching to the new provider because of rate increases in the State Fund.

By March 1, 2003, Unick said most of the remaining trainers would probably switch because of even greater increases.

"Nobody knows how much higher the rates will go," Unick said. "They could be doubled."

Some horsemen have found it would be cheaper to stay with the State Fund until their current policies expire, said Jim Ghidella, a Northern California representative to the Thoroughbred Owners of California who has been involved with the workers' comp issue for the past two years.

Unick believes once the industry can get control of workers' comp claims, trainers will see tremendous improvement in their rates within two or three years.

One problem is that the State Fund has an early termination penalty that could affect trainers who seek to leave early and want their deposits returned to them.

"We have people who have been working with the State Fund on (waiving the penalty policy), and we should know something in a couple of days," Halpern said.

"Everything we've heard from the state has been positive, but we haven't seen the signature (on the waiver) yet," Unick said.