Department of Labor rulings pave the way for Self-Insuring Employee Group Life

Rulings by the Department of Labor (DOL) in the past 12 months have permitted two new companies to insure their employee life business into captives. In May 2003 Decatur, Illinois based Archer Daniels Midland, one of the country's largest agribusinesses, was granted permission to use their Vermont captive to reinsure their employees group life benefits. In August, 2003, International Paper also applied to the DOL to use its three-year-old Vermont based captive to reinsure group life benefits. Permission has now also been granted to International Paper using the DOL's fast track procedure which requires a company to cite similar instances where companies have received DOL exemptions. In their submission International Paper cited Daniels Midland as well as Columbia Energy which had received permission to self-fund its own benefit program back in 2002. DOL requirements include the continued use of A.M.Best 'A' rated licensed insurers to issue policies to employees and improved benefits to employees. Companies are also required to work with independent fiduciaries to ensure such requirements are met but cost savings are estimated to be as much as 25% in addition to the enhanced benefits to workers.