In what cycle will the director audit self-insured employers for their adequacy of estimates of future liability of claims?

• A. 1 year cycle
• B. 2 year cycle
• C. 3 year cycle
• D. 4 year cycle

Answer: (C)

The correct answer is that the director will audit self-insured employers for their adequacy of estimates of future liability of claims in a three-year cycle. This timeframe is significant because it allows for a comprehensive evaluation of the self-insured employer's claims data and liability estimates, which can be complex and subject to change due to various factors such as new claims arising, settlements, or changes in the regulatory environment.

Over a three-year period, the director can gather sufficient information to assess whether the self-insured employer is maintaining adequate reserves for potential claims, ensuring that they are financially stable and capable of meeting future obligations. This cyclical review helps uphold the integrity of the self-insured system and protects both the employers and the claimants by ensuring that liabilities are properly accounted for and managed.

This cycle is structured to balance the need for oversight with the operational realities faced by self-insured employers, providing enough time for trends and patterns in claims to emerge while allowing for timely intervention if significant deficiencies are noted in the estimates.