Which action requires approval from the Director?

• A. Setting premium rates
• B. Appealing a decision
• C. Issuing a license
• D. Transferring claim liabilities to another entity

Answer: (D)

In California self-insured plans, changes that shift the responsibility for paying workers’ compensation benefits to another party require explicit approval from the Director to protect workers and keep the plan financially sound. Transferring claim liabilities to another entity is precisely a shift in who bears the cost of future claims. The Director must review the proposed transferee’s qualifications and financial ability to assume those liabilities, ensuring continuity of benefits for claimants and preventing a situation where future claims are left unpaid.

Setting premium rates isn’t an action the plan typically requires pre-approval for in the same way, since self-insured plans fund themselves based on their own actuarial estimates and reserves rather than fixed regulatory rate schedules. Appealing a decision is a procedural right rather than an action that needs the Director’s approval to proceed. Issuing a license isn’t something the plan does; it’s the Director’s regulatory function to grant a license to operate as a SIP. Therefore, transferring claim liabilities to another entity is the action that most directly requires the Director’s approval.