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The Handbook of Municipal Bonds by FRANK J. FABOZZI, SYLVAN G. FELDSTEIN

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CASE STUDY 10
California’s Workers’ Compensation Insurance Crisis and the Financing of the California Insurance Guarantee Association
Anthony H. Fisher Managing Director UBS Investment Bank
 
 
 
The California Insurance Guarantee Association (CIGA) was created by the California Legislature in 1969 to pay claims of insolvent insurance carriers, including workers’ compensation insurers, that are licensed to do business in the state (the “member insurers”). Like its guaranty fund counterparts organized in most other states, CIGA serves as California’s “safety net” for insured claimants whose insurance companies have become insolvent. CIGA operates three separate business lines: (1) workers’ compensation; (2) homeowners and automobile; and (3) all other insurance provided by Member Insurers (e.g., product liability and commercial property).
CIGA’s operations are subject to the regulation of California’s Insurance Commissioner. A 13-member board of governors (the “CIGA board”) oversees the operations of CIGA. Nine of the CIGA board members are appointed by the Insurance Commissioner and are required to be representative, as nearly as possible, of all the classes of insurance provided by the member insurers. Additionally, there are four public members, two of whom are appointed by the Insurance Commissioner and two who are appointed by the state’s legislative leadership.
Since its creation in 1969, CIGA has successfully taken over the claimspaying responsibilities of over 100 insolvent ...

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