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From YouTube: House BR Subcommittee on Economic Development, Public Protection, Tourism, and Energy (2-22-23)
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A
Here,
all
right
today
we
have
representatives
from
the
education
I'm
in
labor
cabinet
and
the
public
protection
cabinet
they'll
be
presenting
about
the
restricted
fund
transfer
from
the
2022
regular
session.
House
Bill
warning
be
given
an
overview
of
self-insured
groups.
At
this
time.
I'll
ask
you
to
raise
your
right
hand
and
be
sworn
do.
You
swear
affirmative
testimony
you're
about
to
give
me
the
truth.
Whole
truth,
nothing,
but
the
truth
so
help
you
God
all
right,
introduce
yourself
and
begin
your
presentation.
Please.
D
Okay,
I
think
I'm
kicking
it
off
today,
chairman,
as
you
know,
as
commissioner
of
the
Department
of
Insurance
I
wear
two
hats.
One
is
as
commissioner
on
my
daily
duties
and
I
report
through
the
executive
branch,
my
other
hat
I
wear
is
rehabilitator
and
that
is
a
court
appointed
Franklin
Circuit
Court
points
me
as
rehabilitators
when
these
funds
are
insolvent
and
going
into
Rehabilitation.
D
So
today,
I'm
speaking
to
you
as
a
rehabilitator
wearing
that
hat
we've,
we've
asked
we've
been
asked
to
discuss
the
funds
that
were
transferred
last
year
into
the
two
funds,
so
I'd
like
to
give
you
a
little
background.
Please,
the
associated
industries
of
Kentucky
aik
comp
was
formed
in
1979
to
provide
workers
compensation
coverage
to
its
employer
members.
These
were
Kentucky
employer
groups
at
one
time
it
numbered
close
to
4
000
members
when
it
was
placed
in
voluntary
Rehabilitation
on
August,
the
5th
2004.
The
members
had
declined
to
the
number
of
2600.
D
at
the
initial
Rehabilitation
filing
the
estimated
shortfall
was
58.5
million.
It
eventually
grew
to
100
million
344
560
dollars
and
that
included
the
special
assessment
for
the
Kentucky
special
fund
under
a
court
appointed
reorganization
plan.
In
the
2005
plan
of
assessment,
aik
comp
assessed
3862
employer
members
that
had
workers
compensation
coverage
During
the
period
January
1st
99
through
February
28
2005.,
initially,
80
percent
of
the
assessment
was
to
be
paid
in
cash
and
20
in
the
form
of
a
contingent
promising
note.
D
D
As
of
September
2020,
92
million
477
173
dollars
of
the
assessment
had
been
paid,
leaving
a
balance
due
of
seven
million
eight
hundred
sixty
eight
thousand
four
hundred
and
eighty
eight.
There
are
no
receivables
remaining
under
the
release.
Provisions
of
the
3862
members,
1
658,
have
been
fully
released.
D
D
The
claims
that
aik
that
were
paid
for
out
of
last
year's
funding
transfer
were
prior
to
March,
1st
97.,
but
the
remaining
claims
post,
March
1st,
were
transferred
to
the
Kentucky
individual
self-insurance
guarantee
fund.
That's
aik.
The
other
fund
that
was
insolvent
was
the
Kentucky
coal
producers.
So
a
little
background
on
them.
D
Kentucky
co-producers
was
formed
as
a
workers,
compensation
group,
self-insurance
fund
under
the
laws
of
krs-342,
and
it
started
operations
on
March,
2nd
1981.,
its
members
numbered
over
1800
employers
and
they
were
primarily
small
to
mid-sized
coal
producers
and
some
coal
Truckers
kcp
provided
coverage
for
Kentucky
traumatic
injury
in
Kentucky.
Occupational
disease
claims
until
October
31st
1991,
at
which
time
they
stopped
writing
coverage
they
when
they
then
went
into
a
runoff
status
on
January
9
1995
kcp
filed
for
chapter
11
bankruptcy
in
the
United
States
Bankruptcy
Court
eastern
district
of
Kentucky.
D
Through
an
executive
order
by
Governor
Fletcher
signed
on
August
3rd
2004
and
it
was
ratified
by
Senate
Bill
86
in
the
2005
regular
session.
Responsibility
for
financial
oversight
of
active
and
Olive
says
the
word
active
funds
that
it
was
transferred
from
the
department
of
workers
claims
to
the
Department
of
Insurance.
D
D
At
that
time
they
gave
the
department
an
update
on
its
Financial
condition,
stating
that
current
assets
would
pay
claims
through
2025.,
the
Department
of
Insurance
being
the
diligent
people
that
we
are.
We
conducted
our
own
Financial
examination
of
kcp
what
we
found
and
that
exam
started
the
next
month,
June
2011,
complete
in
July
2012.
D
that
the
fund
was
insolvent
to
the
tune
of
21
million,
seven
hundred
and
forty
two
thousand
four
hundred
and
three
dollars,
as
opposed
to
their
assertion
that
they
were
able
to
pay
claims
in
January
31st
2018
Kentucky
co-producers
was
placed
under
Rehabilitation
through
the
court.
The
end
Commissioner
of
Insurance
Nancy
Atkins,
was
appointed
rehabilitator.
Now
I
will
tell
you
each
time.
There
is
a
change
in
commissioner
that
person
then
Don's
that
head
as
rehabilitator,
so
when
I
became
appointed
I
took
over
the
rehabilitation.
D
Now,
let's
talk
about
the
Lost
portfolio
transfer,
which
was
the
actual
event
that
happened
last
year,
that
required
These
funds
in
the
spring
of
2021.
My
Deputy
rehabilitators
confirmed
to
me
that
both
aik
and
kcp
would
not
have
sufficient
funds
to
pay
their
financial
obligations
to
pay.
The
claims
of
Injured
Workers
as
rehabilitator
and
with
preliminary
court
approval
I
initiated
discussions
with
the
Kentucky
Employers
Mutual
Insurance
Company,
and
also
with
the
department
of
workers,
claims
to
negotiate
lost
portfolio
transfers
of
both
aik
and
the
Kentucky
co-producer
funds.
D
They
had
a
previous
issue
with
the
Department,
where
they
did
a
lost
portfolio
transfer
and
they
did
an
excellent
job
and
I
do
want
to
express
once
again
my
appreciation
for
kimi's
willingness
to
take
those
over
on
June
6
2022
Franklin
Circuit
Court
gave
final
approval
of
the
Lost
portfolio
transfers
and
it
has
Bill
one
of
the
2022
regular
session.
Page
64.
language
was
included
that
provided
for
the
transfer
of
23
million
dollars
from
the
Department
of
Insurance
to
the
department
of
workers,
claims
to
quote
account
for
bankrupt
plans
and
shortfalls
under
the
workers.
D
D
D
C
C
Commissioner
Clark
did
a
good
job
summarizing
the
background
of
leading
up
to
the
events
that
led
to
the
appropriation
of
the
23
million
dollars
last
year,
essentially
for
those
those
pre-march
1
1997
claims,
from
aik
insurance
and
from
the
cookie
co-producers
fund,
and
of
that
I
just
want
to
go
ahead
and
tell
you
of
those
funds
that
that
we
did
work
together
with
the
Department
of
Insurance
and
with
Kimi
and
basically
those
those
funds
again
I'm
going
to
come
back
just
a
minute.
This
March
1
1997
date,
which
is
important.
C
They
were
wrapped
up
in
a
package
and
done
through
a
lost
portfolio
transfer
to
Kimi.
In
essence,
the
state's
obligation,
the
state's
responsibility
of
the
state
about
for
future
everything's,
rapidly
package
Kimi
now
takes
care
of
that
and
Kimi
is
in
charge
of
that.
That
package
was
for
approximately
20
million
dollars
of
that
14
million,
roughly
14
million.
Seventy
three
thousand
hundred
ninety
five
dollars
was
to
cover
the
the
kcp
and
5.7
million
was
for
the
aik
pre-march
1
1997
claims
the
remainder
of
that
appropriation.
Approximately
3.2
million
went
to
shore
up
the
920
fund.
C
C
I
also
want
to
mention
to
you
that
that
that
342.920
fund
is
funded
through
two
sources,
primarily
through
assessments,
basically
for
not
assessment
for
assessment,
where
we
assign
a
penalty
for
a
company
not
having
Workers,
Compensation,
Insurance
and
also
through
that
process,
but
also
to
through
that
process.
We,
you
know,
we
end
up
spending
approximately
a
million
dollars
a
year
for
those
claims
that
are
otherwise
for
self-insured.
That
will
liquidated
the
pre-march
1
1997.
about
that
like
say,
we
get
a
million.
We
spend
about
1.2
million.
So
there's
a
continuous
shortfall
of
that.
C
The
rest
of
that
money
that
that
Corporation
went
to
shore
up
that
fund
to
make
sure
that
there
is
that
safety
net
there
to
take
care
of,
because
the
number
one
goal,
the
absolute
number
one
goal
of
workers
comp
is
to
make
sure
that
the
engine
worker
is
taken
care
of.
That's
the
solemn
promise
was
made
back
in
1916
workers,
compensation
started
and
it's
the
promise
that
continues
today
that
bills
claimants,
who
were
injured
on
the
job
and
the
beneficiary
entitled,
including
medical
care,
that
there
is
money
to
take
care
of
that.
C
And
that's
what
helps
take
care
of
those
pre-march
1
1997
claims
so
again
of
that
money
that
commissioner
Clark
talked
about
for
aik,
Insurance,
pre-march,
1
1997
and
the
kcp
claims,
which
are
all
pre-march
1
1997,
because
they
stopped
writing.
Business
are
all
packaged
up
and
in
that
in
that
package,
I
lost
portfolio
transfer
to
there.
Now,
when
we
talk
about
the
future,
where
we
are
now
and
so
forth,
with
with
that,
we
got
to
talk
a
few
minutes
about
these
group
guarantee
funds.
The
group
guarantee
funds
are
three
group
guarantee
funds.
C
There
is
the
individual
self-insurance
fund,
there
is
the
co-employer
self-insurance
fund
and
there's
a
group
self-insurance
fund
of
those
three
funds
were
primarily
going
to
talk
about
the
individual
fund.
That's
one
we're
kind
of
here
about
I'm
sure
some
questions
are
going
to
be
coming
up
about
that
of
the
co-employers
in
the
group
Assurance
fund,
the
department
of
workers
claims
has
regulation,
has
oversight
over
those
more
so
oversight
over
that,
including
we
can
call
Security
in
that.
That's
not
true
with
the
individual
self.
Excuse
me
not
true.
C
C
The
question
that
that
we
have
that
one
of
the
issues
that
we're
having
now
is
that
the
potential
future
liabilities
and
the
producer
final
Life
future
liabilities
is
involved
involving
the
self-insurance
group
funds
they
at
the.
If
we
were
advised
and
the
situations
come
up
that
they
may
in
fact,
or
they
will
be
running
out
of
money,
they
will
be
running
out
of
money
this
summer
or
they
will
be
running
out
of
money,
come
October
so
that
the
question
of
the
day
is
well.
What
are
they
going?
What's
going
to
happen?
C
Who
is
going
to
fund
that
how's?
That
going
to
happen
with
that
group?
I
will
tell
you
that,
as
a
as
a
brief
background
on
this
again
that
March
1
1997
date
there's
absolutely
nothing
within
the
Kentucky
workers.
Compensation
act,
there's
nothing
within
krs-342
that
permits
the
department
workers
claims,
there's
no
law
that
permits
the
the
department
to
reach
into
a
fund
to
help
this
situation,
just
as
no
law
for
it.
There's
no
means
for
us
to
reach
down.
C
There
is
for
the,
for
there
is
that
920
fund
for
the
pre-march
1
1997,
but
there
is
no
such
fund,
no
security
net
for
the
self-insurance
group
fund
for
the
parts
March
1
1997
claims
and
those
claims
primarily
involve
arise
again
from
aik.
We
talked
about
aik
beforehand
and
those
aik
that
were
claims
that
were
included
with
this
the
appropriation
from
last
year.
Those
again
were
for
the
March
1
1997..
C
There
are
still
all
those
claims,
those
claims
for
post,
March,
1
1997
and
that's
what
the
question
of
the
day
is
the
funding
for
those
where
they
are
going
to
run
short
on
that
and
again
I.
Just
emphasize
that
that's
the
fund,
where,
unfortunately,
unlike
the
other
two
self-insurance
funds,
the
dwc
does
not
have,
does
not
regularly
oversight
those
to
the
extent
of
the
others,
and
also
too
we
have
no
means
of
security.
We
have
no
law
to
actually
to
go
in
and
near
the
commissioner
Clark
nor
myself.
C
We
are
non-voting
ex-official
members
over
those
over
the
self
over
the
self-assurance
group
fund.
We
can
urge
we
can
suggest
we
can
do
things,
but
we
have
no
clear
authority
to
say
do
this.
Do
that
the
question
now
comes
down
to
is
that,
although
we
are
not
the
creators
of
the
problem,
it
is
concerning,
because
again
the
department
workers
claims
has
never
has
never
missed
an
opportunity
has
never
in
this.
In
its
108
years,
seven
years
of
existence
failed
to
play
a
workers.
Compensation
claim
the
injury
into
treatment
for
it.
C
I
am
concerned,
what's
going
to
happen
for
the
for
these
workers
in
a
fund
in
which
their
benefit
their
money
is
running
out
and
I.
Guess
that's
where
I
come
at.
This
point
is
to
leave
at
that
point
that
we
simply
do
not
have
the
law
just
reach
down,
and
it
does
cause
me
good
deal
of
concern
on
what
to
do
with
these
funds
or
what
to
do
with
these
claimants.
F
There
we
go
first
of
all,
thanks
for
coming
in
for
me
from
my
position:
that's
a
lot
because
I,
don't
I,
don't
know
a
lot
about
this,
but
this
sounds
like
a
very
grave
concern
to
me.
My
biggest
concern
here
is
that
we
could
possibly
have
Injured
Workers
out
there
that
aren't
getting
claims
paid
whatever
we
do,
we,
we
can't
let
that
happen,
absolutely
a
couple
of
questions
again.
If
these
questions
are
out
of
line.
F
Please
tell
me,
and
please
help
explain,
help
me
understand
this
a
little
bit
better,
so
this
group
self-insurance
fund
that
we
have
right
now.
That
is
short
as
I
kind
of
understand
this.
This
used
to
be
have
several
members
to
it:
yeah,
correct,
correct
and
now
it's
down
to
a
few
correct,
so
they
have
liabilities
that
they
have
to
take
care
of
right,
many
of
which
may
have
come
from
aik's
failure.
D
F
And
you
know
pushing
this
back
in
assessments
on
these
small
groups
is
probably
going
to
be
enormous
and.
F
C
C
We
can
offer
some
options
as
as
concerned
as
as
you
are
as
well,
and
those
options
and
I'll
be
glad
to
speak
those
options
being
either
to
the
assessments
or
to
borrow
the
money
they
that
within
within
the
group,
to
borrow
the
money
or
to
seek
an
appropriation
from
the
general
assembly
or
some
combination
thereof,
and
the
question
of
course,
being
this
is
a
a
whether
to
open
the
budget
and
so
forth,
and
the
issue
will
it
can
be?
Is
whether
do
we
do
and
that
the
fund
can
speak
the
self-insurance
group
fund?
C
They
can
speak
for
themselves,
but
the
question
being
what
you
just
asked.
Sir,
do
we
look
for
sufficient
money
to
get
us
to
get
that
fund
for
that
fund?
I
say
we
get
that
fund
to
July,
essentially
July
of
2024.,
to
make
sure
there
is
not
a
shortfall.
Come
June
come
July,
come
August
in
which
we
have
which
Ginger
workers
cannot
get
covered
to
get
that
gap
between
this
and
then
an
opportunity
for
this
legislature.
C
Come
say:
let's
figure
this
out
more,
so
we're
going
to
talk
about
a
gap
for
that
period
or
to
try
to
take
care
of
it
all
right
now
again,
the
self-insurance
fund
can
talk,
can
better
speak
for
themselves
on
what
options
they
believe,
but
the
options
that
we
that
we
see
are
we
can
only
recommend
against,
for
the
legislature
to
decide,
is
assessing
or
into
the
and
they
have
assessed
they
assessed
just
recently.
They
did
assess
the
first.
C
They
assessed
and
I
believe
the
end
of
this
year
in
the
assess
again
this
year,
which
will
get
them
to
that
summer
date
we'll
get
them
to
that
and
then
the
issue
comes
well.
Do
they
seek
to
borrow
money
to
cover
that
they
have
the
ability
to
borrow
money
and
commissioner
Clark
can
speak
to
that
or
they
seek
an
appropriation
and
so
forth
won
this
legislature
again,
I'll
come
back
to
some
hybrid,
some
combination
of
the
above,
but
again
it's
it's
representative
Gentry.
It's
a
it's
a
deep
concern.
C
F
Yeah
we
certainly
we
definitely
want
to
avoid
that
at
all
costs,
so
I,
thank
you
for
that
answer.
F
I
I
guess,
if
I
was
going
to
ask
one
more
question:
Mr
chair
again,
I'm
trying
to
wrap
my
mind
around
this.
If
we
try
to
put
this
impetus
back
on
the
remaining
members
of
this
self
group
group,
can
they
even
sustain
us?
I
mean
what
kind
of
monies
are
we
talking
about
and
what
would
we
be
asking
them
to
pay
an
assessment
if
we
had
to
go
down
that
route
without
any
kind
of.
E
So
so,
representative
Gentry,
as
you
aptly
noted
earlier,
there
were
about
17
groups
that
were
part
of
this
about
two
decades
ago.
E
Now,
we're
down
to
between
two
and
four
depending
on
who
you
talk
to
Simply
put
assessment
is,
is
not
going
to
be
enough
to
get
to
the
number
that
that
we
think
will
get
us
to
June
30th
of
2024.,
so
we're
looking
at
a
potential
solution
of
assessment
plus
and
then
that
plus
is,
is
really
Falls
to
you
as
as
the
legislature,
and
that's
do
we
require
that
you
know
these
groups
loan
themselves
money
and
then
the
second
is
option
is
an
appropriation.
E
D
F
Okay,
thank
you
for
that.
I
just
hope.
In
a
day
where
we
have
rainy
day
funds
there,
of
course,
trying
to
get
funds
in
a
non-budget
year.
This
year
is
kind
of
like
taking
a
stake
away
from
the
dog
it
hadn't
been
fed
in
a
week,
so
yeah
I'll.
F
But
yeah
I
I
certainly
would
hope
that
my
colleagues
would
take
this
very
seriously
and
figure
out
whatever
options
might
be
on
the
table
and
and
act
appropriately,
which
is
quickly
so.
Thank
you.
Thank
you.
A
Thank
you,
representative
Gentry.
Can
you
explain
this
new
to
me
it's
a
new
world
to
me.
So
can
you
explain
the
difference
between
Kentucky,
individual
self-insured
fund
and
the
Kentucky
group,
a
self-insured
fund.
C
Sure
I
give
my
best
way
to
explain
those
different
funds.
It's
easy.
We
one
is
easy.
The
coal
group-
that's
just
what
it
speaks
to
there's
three
to
three
funds:
we're
speaking
of
again
we're
talking
about
the
Kentucky
individual
self-insurance
guarantee
fund,
the
Kentucky
gold,
employer,
self-insurance
fund
and
the
group
fund.
And
what
we're
talking
about
here
today
is
the
group
fund.
Those
are
basically
made
up
of
different
self-insureds
who
have
come
together.
C
What
the
group
fund
is
there's
different
and
ensure
different
self-insured
group
that
come
together
to
join
as
a
group,
for
instance,
it
includes
AGC
at
one
point
include:
Kessa
include
aik,
which
aik
was
a
self-insured
insurance
company
associated
industries
of
Kentucky's
self-insured
group
was
a
full
name
for
that,
so
that
that's.
What
we're
talking
about
here
is
different
than
the
individual
insurance
and
different
than
the
Cobra.
So
these
are
actually
groups
of
self-insurance
that
we
permit.
That
was
permitted
under
this
legislation
that
was
created,
I
believe
in
1990
6
for
the
self-insured
guarantee
funds.
C
So
what
the
primary
issue
was
the
first
two
for
those
the
individual
group
assuming
the
individual
fund
self-insurance
fund
and
the
co-employ
yourself
fund.
Those
are
different,
their
security
we
are
required.
We
maintain
watch
that
security
is
that
third
fund,
the
group
fund,
that
was
it,
was
treated
differently
and
it
by
law
by
the
statute
and
again
it's
those
group
of
funds.
That's
what
brings
that
together.
Does
that
help
explain
a
little
bit?
It's
groups
yeah.
D
A
D
Let's
say
you
know:
Sharon
Clark
works
for
ABC
widget
company
and
then
ABC
widget
company
joins
affiliated
with
Associated
industries
of
Kentucky,
and
there
were
four
thousand
of
those
kind
of
like
employer
and
then
aik
company
enters
into
the
guarantee
fund
along
with
all
of
these
others
that
Mr
Flynn
has
mentioned.
So
it's
it
was
my
multi-level,
but
again
the
intent
rather
than
buy
it
outright
from
you
know,
one
of
the
commercial
carriers
they
elected
to
do
that
and
it's
it's
similar
to
health
insurance.
You
know
this.
D
A
You're
talking
about
the
fund,
that's
going
to
have
a
shortfall
and
you
say:
there's
no
law
that
would
allow
you
to
go
to
another
fund
to
bring
it
into
to
cover
that
shortfall.
That's
correct,
sir!
Is
there
a
fund
that
you
could
borrow
from
if
there
was
a
law
that
allowed
it
is
there
a
fund
that
would
cover
that
until
you
could
get
an
appropriation
like
next
session?
No.