ARIZONA STATE SENATE
Phoenix, Arizona
small employer
reinsurance program; repeal
Repeals the Small Employer Reinsurance Program (SERP) effective December 31, 2002.
Background
SERP was established in 1993 in an effort to decrease the number of uninsured small employer groups through a guaranteed issue program. SERP was intended to spread risk among all participating insurers by allowing carriers to reinsure lives that the carrier believed would produce excess claims. All participating insurers are assessed for the losses of the program and for any administrative costs.
Since its inception participation in SERP has decreased and currently only 18 out of 68 insurers participate. In addition, the Department of Insurance (DOI) has concerns with the difficulty in finding persons to serve on the board and obtaining bids for the administrative contracts.
This measure repeals SERP and transfers unrelated monies in the SERP assessment fund to a new fund for voluntary plans for the Joint Underwriting Association that was previously consolidated with the SERP fund.
There is no anticipated fiscal impact to the state general fund associated with this bill.
1. Repeals SERP effective December 31, 2002.
2. Establishes a separate fund for voluntary plans for the Joint Underwriting Association.
3. Transfers SERP assessment fund monies to the voluntary plans fund for the Joint Underwriting Association.
4. Requires the department to phase out SERP through a plan of operation written by the SERP board and approved by the Director of DOI.
5. Exempts the assessment fund from a lapsing appropriation.
6. Contains technical and conforming changes.
FII 1/23/02 DP 8-0-0-2
Third Read 2/5/02 DP 56-0-4-0
Prepared by Senate Staff
March 26, 2002