Can An Employer Leave a State Fund Safety Group Mid-Term?
Question from a Big I NY member: I have a client in a New York State Insurance Fund (NYSIF) safety group, and they have a competing agency telling them they can move their coverage mid-term to a private insurance carrier. What is the protocol for moving NYSIF safety group members? I certainly did not think a mid-term cancellation is allowable, not without significant penalties and such.
Answer: I don’t believe the other agency is correct.
The New York State Department of Labor has a set of regulations titled “Basic Rules for Safety Groups” in its chapter of regulations that apply to NYSIF. Section 451.7 titled “Membership in safety groups” states:
“Membership in a safety group shall be continuous from year to year except that the executive committee of a safety group may, subject to the approval of the State Fund, exclude any member from continued membership thereunder at any anniversary date of the group for failure to comply with group rules. Notice of intention to discontinue membership and the reason therefor shall be given to such member and to the State Fund at least 30 days prior to the anniversary date of the group. Any member of the group may be removed, terminated or discontinued from the group, as of any anniversary date, if in the opinion of the State Insurance Fund management, after consultation with the group manager and/or the Executive Committee, continued membership in the group would not serve the basic objectives for which the group was formed. A member may withdraw from a safety group only upon the anniversary date of the group and upon giving written notice to the group manager and to the State Fund at least 30 days prior to the anniversary date of the group. A qualified risk may transfer from the general group to a safety group upon giving due notice to the group manager and to the State Fund at least 30 days prior to the anniversary date of the risk, provided new business in a similar amount of annual premium precedes or accompanies such notice of transfer.”
If a group member wishes to replace its NYSIF coverage with coverage from a private carrier, it may do so only on the group’s anniversary date and only if it provides at least 30 days’ advance notice to the group manager and NYSIF. This would seem to prohibit a mid-term change.
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