Severe Lack of Home Day-Care Insurance Told

Child day-care representatives said at a state Insurance Department hearing Monday that more than half of California’s nearly 20,000 home day-care centers are uninsured and urged the department to set up a joint underwriting authority that would involve all of the state’s insurance companies in providing liability insurance to the centers.

But company officials who also testified at the Los Angeles hearing said such a major step would not be effective.

They contended that insurance prices for home and commercial day-care facilities have recently stabilized after large increases and that most premiums are running about $50 to $60 per child per year, only about 2% to 3% of the average day-care facility’s annual per-child charges.

A joint underwriting authority--under which the state would sell the insurance and parcel out the policies among all companies, according to their share of the overall insurance business in the state--could not offer the insurance for any less, or motivate uninsured day-care centers to buy insurance, said Kevin Flynn of the California Casualty Group of companies.

Flynn, a member of the governor’s task force to study the day-care coverage problem, said he has concluded that “there is not a serious problem of affordability” in California.

Earlier, however, Sharon Kalemkiarian, head of a San Diego-based group known as Insurance for Child Care, had testified that seven of every 10 home day-care operators that her group surveyed said they could not afford insurance.

Many of the day-care centers in homes serve six children or less and operate on a very thin margin, she said. Some have found that insurance runs $90 a child, not $50, and in one case the premium offered was $170 per child. Many of the centers do not have cash on hand to meet the companies’ demands for payment when the policy is issued, she said.

Assistance Plan

Others testified that some centers have trouble securing insurance at any price, particularly if they serve emotionally disturbed children.

There was testimony from both sides, meanwhile, that large numbers of day-care operators have not participated in a marketing assistance plan known as Cal Care that was formed last year by 21 companies with the encouragement of the Insurance Department.

The aim was to make sure that insurance would be more available to the day-care centers at a time when many were complaining they could not secure it at any price.

Cal Care sent out 16,000 brochures to the centers, but received only 788 applications for insurance and finally sold only about 200 policies, according to the plan’s chairman, William Metzgar of Aetna.

Even that disappointingly small interest has waned, Metzgar said, with applications recently slowing to “a trickle.”