Insurance Program Will Cut Day-Care Premiums

Implementation of a program aimed at providing “affordable” liability protection to licensed child-care operators whose skyrocketing premiums have threatened to put them out of business was announced Thursday by state Insurance Commissioner Bruce Brunner.

The voluntary project was fashioned by insurance carriers and state regulators in response to a crisis that peaked in mid-summer when liability insurance premiums shot upward, largely due to major lawsuits and to concern over alleged child molestation at day-care facilities.

In some cases, operators, many of whom care for children in their homes, saw their insurance bills sail from approximately $250 a year to $1,250 or more. Insurance industry spokesmen have downplayed child molestation as a significant factor and have said that the higher rates were necessary to keep pace with claims.

One insurance company representative, David Fisher of Aetna, told a press conference where the program was announced that the child-care business “does present some underwriting concerns from a supervision standpoint, not necessarily child molestation, but the day-to-day supervision of children.”

Brunner, whose department worked with insurance companies to set up a procedure that would provide liability coverage at reasonable cost, told the press conference that 26 carriers in California have agreed to accept licensed child-care operators. Previously, only a handful of firms provided such coverage.

The industry hastened to act after the Senate passed a bill that would have required insurance companies to provide the coverage and would have given Brunner’s department the authority to set their rates.

The industry was aided, however, by approval of legislation that rewrote a 10-month-old law that required family day-care providers to purchase at least $300,000 in liability coverage. The new legislation establishes a $100,000 limit for each occurrence, up to $300,000 in any given year. As is the case now, the courts could award damages above those limits.

Under the program, a licensed child-care operator who was unable to get liability coverage from an agent or broker could apply to “Cal-Care,” whose participating companies will determine their own rates. If an operator is turned down by a Cal-Care participant, the program will make additional efforts to resolve the issue and provide the insurance.

Sen. John Seymour (R-Anaheim), who carried the Senate legislation, said insurance executives told him that a premium of $250 a year was far short of meeting costs, but he believed they could provide the coverage “for a whale of a lot less than $1,000 or $1,300 a year.”

He said he was hopeful that under the Cal-Care plan a yearly rate of $400 to $600 would be charged to small operators.

Brunner said that any insurance agent or broker can help operators in applying to Cal-Care or they can call toll-free 800-428-8181 for technical information.