SACRAMENTO, Calif – It has been a little over a year since the Credit Union Self-insurance Group (CUSIG) was formed and Patelco CU Human Resources Vice President Ed Cassady, who serves as board chair couldn't be more pleased with the results. "Well we started with five credit unions and finished 2004 with 14, added three in 2005 and we currently have three to four more credit unions considering joining CUSIG," said Cassady. "If we have anything to brag about it is that our losses combined totaled 2.7 million claims -only 11% of total contribution and so in that respect we've done exceptionally well." According to the Workers' Compensation Insurance Rating Bureau, workers' compensation rates in California are twice the national average. Faced with a projected 45% increase in workers compensation and premiums, five credit unions – WesCorp FCU (a corporate CU), Travis CU, KeyPoint CU, Patelco CU and SAFE CU teamed up to develop their own solution to the growing problem. Rather than purchase insurance, CUSIG pools its resources to insure each member's exposure. Claims are paid from the pool of premiums and the members control the operation of the group. A third-party administrator and group administrator oversee the program. Among the requirements for credit unions interested in joining CUSIG include a fiduciary study, a minimum of $500 million in assets, an experience modification rating of less than 1.02 and $5 million in payroll. In addition, credit unions with operations outside of the state are not covered. "When we started this I used to think I knew quite a bit about workers compensation but discovered I knew absolutely nothing, but now I do and I've learned so much during this process," said Cassady. Cassady says some of the greatest challenges ranged from educating the NCUA on self-insurance groups and helping alleviate their justifiable concerns to setting rates. "It's part of the learning process so unfortunately the first time around I think we set the rates too low and the software we used didn't include the California Workers Compensation data so we've had to go back and redo the rates and it costs more but the numbers this time around are more accurate," said Cassady. He adds that by far the biggest challenge has been learning about the needs of the individual members. "Our business model is different than any other self insured group in California because we are the only one that has an aggregate stop loss policy- which can't be bought in California," said Cassady. "Fortunately CUNA Mutual stepped up to help us even though they don't issue policies here in the market and without their efforts in getting this then CUSIG probably wouldn't be around. They wrote the policy and had it approved in California and issued in 30 days. It was one of the requirements NCUA put on us and we couldn't have done it without them." He chalks all the experiences up to the learning curve as a whole from state requirements to keeping track of changes in legislation. "It is still a new industry here and in the entire state there are really only two true experts on self-insured groups and they are teaching even the state employees who have been hired to educate us so we're all learning alongside one another. The challenge is to find the best vendors you can," said Cassady. "The learning curve may be extremely deep and it has been quite an experience but I would do it again because it has all been worth it." In general board members meet monthly and Cassady says it isn't unusual to also hold a few conference calls between meetings. The group held its first annual meeting in San Diego earlier this year and provided some seminars and safety related discussions. "Members really enjoyed it and there has been some interest from other smaller credit unions that want to start their own self-insurance group so basically we have a turnkey package in place and are exploring how involved we should be," said Cassady. "Do we say `here are the vendors, here's what you need to do go create your own group' or can we do more?" Looking ahead to its second year, Cassady says there are a few more decisions that need to be made including how large they want CUSIG to be, succession planning and how many education seminars should be held a year and where should they be held. "I don't think we want it much larger and the purpose of CUSIG is not just to save money but present alternate solutions for credit unions for workers' compensation and we've done that," said Cassady. "We have a lot to do prior to the end of the year from defining the role of each board member and internal processes to straightening out all the members' needs and creating guidelines so CUSIG continues to run smoothly." As far as advice for other credit unions considering a similar solution Cassady says to explore and consider all viable options. For example, the California Credit Union League has a program that may be a better fit. "If the credit union is in California and has tolerance for more risk then a self insurance group may be the answer but before you sign up you should become educated on what's available in the marketplace rather than focus just on what you want to pay," said Cassady. [email protected]