LOS ANGELES — The Greater California Livery Association, in
an effort to lower workers’ comp expenses for its members,
is moving toward establishing a fund to provide benefits
for chauffeurs in the state.
GCLA leaders said they were moving ahead on several
• They were looking to survey members on their interest in
participating in the program.
• They intend to seek an amendment to California’s Worker’s
Compensation Law that would allow them to establish a
worker’s comp fund.
• They are exploring the possibility of setting up a not-
for-profit corporation tentatively named the California
Limousine/Sedan Driver/Operators’ Injury Compensation Fund.
GCLA leaders were considering funding the worker’s comp
program with a 3% surcharge assessed on every trip made by
California operators pay one of the highest worker’s comp
rates in the nation, about 30% of a chauffeur’s base salary.
GCLA’s efforts arose out of a recent meeting in which
members heard from Victor Dizengoff, executive director of
the New York Black Car Operators’ Injury Compensation Fund,
and attorney Wayne Badon.
Based on their nine-year battle to lower worker’s comp
rates for New York operators, Dizengoff and Badon offered
advice on what type of system might work best in
California, the probable costs and benefits, and how many
operators would need to participate.
The New York program “might not work everywhere,” Dizengoff
cautioned, “but it’s a model for how it could be done.”
In New York, the cost of the program is financed by a 2%
charge that is added to every service run that operators
make, he noted.
The options available to California operators, Badon said,
are setting up a self-insurance program or starting a
captive insurance company.
Since implementing a self-insurance program could take
years, more immediate relief could come from a group
captive program, according to Badon.
Historically, captives have been owned and controlled by
one company and insured that company and/or its
In the U.S., group captives must be licensed by a state or
other political entity and use a fronting insurance
carrier. Or, they must operate under the Federal Risk
Retention Act. The captive companies may either be stock,
reciprocal or mutual in organizational form.
The most inexpensive option would be to choose Bermuda as
the licensing location, Badon noted, where the start-up
cost is $250,000. The Cayman Islands, Hawaii or Vermont are
other, more expensive, options. The cost in Vermont, for
example, is $750,000.
To set up a group captive, California operators would have
to come up with a minimum of 2,500 cars, which is a large-
enough pool to determine the overall risk, and together
raise the $250,000 set-up fee, the attorney advised.
They must also determine if their current combined losses
are lower than their premiums, which is essential to make a
captive financially viable. If the losses are higher, they
are better off paying their current rates to the state, he
“In California, the actual losses probably represent only a
fraction of the premium pay; the California [worker’s
compensation] rate is preposterously high given the risk,”
Baden noted. “When we took control of the claims [in New
York], the costs were much lower than the rates would have
He added that there is now a $14-million surplus in New
York, thanks in large part to the way claims have been
Mark Freeark of Transportation Insurance Brokers cautioned
operators that the system in New York is too young to prove
that it is a secure alternative to paying insurance
companies’ worker’s comp rates.
“In 10 plus years, claims could skyrocket and that captive
is gone,” he said, adding that insurance firms are also
looking at developing more cost-effective programs.