What does a self-insured employer's failure to fund their trust account affect?

The failure of a self-insured employer to fund their trust account primarily impacts their ability to make payments on current claims. In California workers' compensation, self-insured employers are required to maintain a trust account to ensure that they have sufficient funds set aside to pay benefits for claims that arise. If this account is not properly funded, the employer may not have the necessary resources to settle current claims, leading to delayed payments to injured workers or failure to meet their financial obligations.

This funding is crucial because it acts as a financial guarantee for the employer’s ability to pay workers' compensation benefits without relying on outside insurance. Consequently, maintaining a properly funded trust account is essential for the smooth management of active claims and ensuring compliance with regulatory requirements.