During the late seventies the premium for workers' compensation coverage was so expensive in Georgia that many employers found it difficult to purchase coverage. Some employers had difficulty finding an insurance company willing to provide coverage and they were forced to participate in the assigned risk pool. The leaders of some of Georgia's most well run associations began meeting to discuss how they could help their membership. They worked to pass legislation that would enable them to create group self-insurance pools with the goal of stabilizing the cost of workers' compensation for their members. Largely due to their efforts, In 1980, the Georgia General Assembly passed a law (O.C.G.A., Chapter 34-9-151-181) which allowed employers to band together and pool their workers' compensation liabilities by forming group self-insurance funds.
Six Associations quickly worked to create funds for their membership. On May 1, 1982, the Georgia Automobile Dealers' Association was the first Association to have their group fund licensed in the state of Georgia. It was quickly followed by the Association County Commissioners of Georgia (July 1, 1982), Georgia Associated General contractors (July 8, 1982), Georgia Municipal Association (October 1, 1982), GEMC (October 1, 1982), and the Construction Suppliers Association (October 1, 1982). By 1995, there were 43 funds licensed in the state of Georgia.
Group funds provide many benefits to their members such as:
Georgia's group funds are created by a sponsoring association and controlled by a board of trustees that are usually members of the association, as well as participants in the fund. The fund may contract with several service companies for things such as administration, claims, loss control and medical management or they may choose to provide these services themselves.
Group funds are closely regulated by the Georgia Insurance Commissioner. Unlike insurance companies that must get an operational permit from the Workers' Compensation State Board, a fund receives a Certificate of Authority from the Insurance Commissioner. Funds must have their bylaws, intrastate agreement and application approved by the insurance department. They are required to submit quarterly financial reports and annual actuarial reports. Rate filings are submitted to the Department, as well as to the Insurance Advocate's Office when a rate increase is requested.
There are many benefits to the employers who participate in group funds. Those members who participate in the fund "over the long haul" often benefit the most by saving on cost and by preventing injuries to their employees because of their effective loss control programs. Group funds are especially careful to maintain adequate reserves and surplus since the members are jointly and severally liable. The fund's trustees take this into account when they consider rates and dividends and make decisions that protect the members interests while providing the most cost effective workers' compensation coverage possible.