Purpose

The objectives of our examination were to determine (i) the extent to which the New York State Insurance Fund (NYSIF) participates in the Statewide Offset Program (SWOP), and (ii) the amount of outstanding premiums NYSIF may have been able to recover through SWOP since April 2012.

Background

New York State businesses pay NYSIF premiums for workers compensation and disability insurance.  If a policyholder stops making payments, NYSIF will cancel the policy and attempt to collect the amount owed. Some of the businesses with outstanding debt to NYSIF do business with, and receive payments from, New York State.

SWOP, administered by the Department of Tax and Finance (DTF), is a way for State agencies to offset State payments to recover outstanding debt. In May 2015, we recommended NYSIF participate in SWOP as a means to recover outstanding premium.

Key Findings

NYSIF may have been able to recover up to $3.8 million in outstanding premiums from payments to New York State vendors from April 1, 2012 through May 2, 2016.

NYSIF has not begun to collect outstanding premiums through SWOP; however, it has taken steps to participate in the program. For example, NYSIF received DOB approval to participate in SWOP. In addition, NYSIF developed internal procedures and identified system enhancement to meet certain DTF’s technical requirements.

Key Recommendations

• Continue taking steps to participate in SWOP.
• Consider system enhancements to identify policyholders and account balances for each category of receivables.
• Assess the feasibility of submitting receivables which meet SWOP criteria to DTF on an individual basis prior to implementation of proposed system changes, and
• Explore implementing an alternative process, such as administrative determinations, where feasible to qualify outstanding debt for SWOP.