Melchionni says NYIA has been advising lawmakers for years that the group self-insured trusts were underfunded and that this crisis could not be avoided. She says the bond sale "is a last ditch effort to solve the calamity of these quasi-regulated trusts. 

"These policyholders chose to buy into a system that was cheap and did not have the protection of the guaranty funds. Now they are paying the price," Melchionni says.  

Under New York's plan included in the 2013 state budget, the businesses liable for the trusts will reimburse the WCB for the cost of these "assumption of liability policies" over 10 years, at low interest rates.

Gov. Andrew Cuomo says that by the end of the year, the WCB will finalize the insurance-policy purchase on behalf of the two largest defaulted group trusts, the Healthcare Industry Trust of New York and the Healthcare Providers Self Insurance Trust.

Cuomo says additional proceeds can purchase insurance policies for group trusts that refused to meet their claim obligations and whose claims the WCB now administers. The Business Relief Act of 2013, part of the new state budget, authorizes up to $900 million in bonding capacity.

The bonds were issued through the Dormitory Authority of the State of New York, and received AAA credit rating from Moody's, Standard & Poor's and Fitch, according to a statement from Cuomo. The lead underwriters were Siebert Brandfort Shank and Goldman Sachs. The bonds are free of New York State and city taxes.