A cooperative that provides workers compensation coverage told its construction company members last week that it will wind down its operations at the end of this year.
The Preferred Builders Self-Insured Group provides workers compensation coverage to about 50 construction companies, most of them subcontractors, in Nevada.
The self-insurance group was a casualty of declining payrolls in the construction industry, said Joe Burgess, senior executive vice president of CHSI of Nevada, the Reno company that administered the group.
As construction companies close their doors and as surviving companies shrink their staffs, directors of Preferred Builders Self-Insured Group concluded that the plan no longer would generate enough revenue to cover its overhead costs.
Doug Webber, co-owner of Stitser Drywall of Reno and chair of the self-insurance group's board of trustees, said the group spent three months looking for other options before it decided to close it down.
Burgess said the board was reluctant to wind up its affairs. Preferred Builders Self-Insured Group had been in existence for ten years.
"They loved this program," he said.
Webber said the group was financially solid, and its claims experience continued to improve during the past year.
"This no reflection on the group. We had a successful group," Webber said.
The members of the self-insured group now must hustle to arrange other workers compensation coverage by the start of next year.
Burgess said CHSI is assisting them with the paperwork they need.
"We want everyone to have the softest possible landing," the CHSI executive said.
CHSI staff plan to meet this week with representatives of the Nevada Division of Insurance, which will review the plan to wind up the cooperative group's affairs.
Terri Chambers, chief of the self-insured workers compensation section of the division of insurance, said state officials have been aware of developments in Preferred Builders Self-Insured Group for several months.
"We're not concerned or alarmed," Chambers said. "They are being prudent in their decision-making."
The biggest question, the state official said, is how the group will handle workers compensation claims that still are outstanding at the end of this year.
Webber said the group appears to be "very well reserved" for claims.
Burgess said the decision by the Preferred Builders Self-Insured Group doesn't affect other self-insured groups managed by CHSI. They include restaurant and transportation groups in Nevada as a restaurant group in California, the largest managed by the company.
