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Self-insured groups (SIG) are created by business owners pooling their resources to achieve greater control, improved claims outcomes and lower overall costs. Members share in any surpluses or shortfalls of funding needed to cover claims and operating costs of the group.California has adopted and supports the self-insurance option despite pressure from parts of the legal and financial community that oppose it.

The California Restaurant Mutual Benefit Group (CRMBC) is a California Self-Insured Group formed by restaurant owners choosing to opt out of commercial insurance. CRMBC is the only Workers’ Comp Self-Insured Group for California Restaurants. In an often-problematic industry, it has also become California’s largest self-insured group with more than 3,000 members and annual payroll greater than $1 billion. Statistics presented at its annual meetings reflect improvement across the board since the plan was founded in 2005.

Members share in any surpluses or shortfalls of funding needed to cover claims and operating costs of the group. In the early years of CRMBC, mismanagement by third-party service providers resulted in the group undercharging itself and incurring an $80 million deficit.

The deficit was discovered during a regulatory audit by the State of California Office of Self-Insurance Plans (OSIP). The group’s board of trustees immediately undertook a remediation plan to correct the deficit and to instill strong operational and financial controls going forward. CRMBC appointed a new administrator, implemented cost-cutting measures, and completely overhauled their claims management and loss control providers and procedures.

This month CRMBC announced that it has successfully raised $100 million in capital over the past decade from its members and through diligent fiscal controls. These actions combined with member assessments resulted in a remarkable turnaround resulting in a fiscally strong and sound group today. Interestingly, CRMBS said “even with the additional assessment, many members still paid less overall than they would have paid to a traditional carrier.”

“Our team did a full analysis of what we paid in premiums including our assessment compared to what we would have paid in the commercial market, and we still paid less by staying in CRMBC,” reported Bryce Myers, Owner of 21 Sizzler Franchise locations and a Richie’s Real American Diner.

To further limit past exposure and turn the page on the early days of the Group, CRMBC completed two loss portfolio transfers (LPTs) approved by OSIP where Safety National Insurance assumed all responsibility for past legacy program claims from 2004 through 2015. This freed the members from liability exposure of the past and assisted them to begin focusing on the present and future health of the group.

In 2023, accompanying the recently announced new leadership of CRMBC, The PATH Alliance was appointed as the group’s new Administrator beginning in May. PATH brings extensive expertise in financial management, regulatory compliance, claims oversight, safety and loss prevention, and member service to the group. LWP Claims Administration is the third-party administrator handling all claims for the group, while ALC Consulting is an outside claims consultant providing independent claims oversight.