California Workers' Comp Plan Just About Ready

by Jack Shinar

A new deal for workers' compensation insurance in California may go into effect as soon as Sept. 1, but many trainers in the state remain unconvinced is the ultimate answer.

The plan, a so-called "captive insurance program," will free the 800 or so Thoroughbred conditioners in California from the clutches of the state insurance fund. With the state fund, trainers watched basic workers' comp rates jump to nearly $50 per $100 of payroll since March, when the only private company in the state still writing policies decided to stop.

John Patrick Unick, national sales manager for Maroevich, O'Shea and Coghlan of San Francisco, has taken a lead role in putting the new program together and will act as a broker for the northern half of the state once it begins. He said captive insurance should reduce the basic rate before discounts to pre-March levels of about $40 per $100 of payroll.

The exact rate is a matter of ongoing negotiations with one of two private carriers that horsemen are considering, Unick said.

Depending on when that decision is made, the new program can take effect. It was scheduled to start Sept. 1, and Unick said it's "50-50" it will.

Ed Halpern, executive director of the California Thoroughbred Trainers, was less optimistic. "We had an agreement, or thought we did, with one company, but factors within the insurance industry changed that," he said. "Now we're not sure when we'll have a deal. It could be by Oct. 1, but I would hesitate to put any kind of a date on it."

Once in place, Unick said the plan's success is dependent upon "banding an industry together that doesn't usually band together."

"It's better than nothing," said Vladimir Cerin, one of the leading trainers in Southern California. "I'm sure it's not the answer. Workers' compensation insurance remains completely out of control. As one of the larger barns, I'm not hurt as badly as some others. But if only the top 20 stables have horses, we can't keep going.

"We need the barns with six to eight horses, but when it takes six or seven months to get a horse to the races...I'm also one of the small-time owners, so I know how expensive it is."

Cerin said trainers will never get relief until they have their own self-insurance program. He said they have met with a Los Angeles attorney who is working on such a plan.

Unick said the idea behind captive insurance is to stabilize rates by getting trainers to standardize safety practices and provide accurate payroll information and claims histories. He said the industry has hurt itself in the past by fudging payrolls and claim amounts.

A third-party administrator will be appointed to oversee the program, and there will be people familiar with the backstretch to watch for unsafe conditions and monitor claims, Unick said.

"We're using the power of the group policing itself for the good of everybody," Unick said. "The trainers are in it together when it comes to workers' compensation. It's a lot like driver's insurance. You keep a clean record and your rates will drop. The guys with bad records, it's like any other business. Eventually, they won't be able to stay in business because it will be too expensive for them. Their owners will go elsewhere."

Unick said that as long as claims don't exceed roughly $17 million annually, which he said is highly unlikely, the program should succeed.

Racetracks and the Thoroughbred Owners of California have agreed to kick in as much as $5 million via contributions through purses previously earmarked for the statewide marketing program and stabling and vanning fund. A bill allowing them to do so has cleared the state legislature without opposition (it received Assembly concurrence Aug. 20) and would become effective as soon as Gov. Gray Davis signs it.