Things to Know About Texas Workers Compensation: How it is Unique

When it comes to workers' compensation, Texas is unique in several ways.  The following is a basic primer for people outside of Texas who may be involved in a Texas workers' compensation claim. 

Texas has four types of work comp benefits.  They are: 

1.       Income benefits – replaces a portion of the wages an employee loses because of a work-related injury or illness

2.       Medical benefits – pays for the necessary medical care due to a work-related injury or illness

3.       Burial benefits – pays some of the cost of employee's funeral to the person who paid the funeral expenses

4.       Death benefits – replaces a portion of lost family income for family members of employees who die as a result of a work-related injury or illness

The average weekly wage (AWW) in Texas is calculated based on the 13 weeks prior to the date of injury for full time workers (30 hours or more per week).   If the employer does not continue to pay for health insurance while the employee is off work due to a work comp injury or illness, the cost of health insurance is also added to the wages.  If the employee has multiple jobs, the income reportable for federal tax purposes at the second job is added to calculations to determine the AWW.  (School district employees have their own separate calculation system for AWW, which is not included here.)  The Division of Workers' Compensation establishes each year a cap or maximum amount that can be paid per week.  The minimum amount that can be paid for an AWW is 15% of the maximum amount.

INCOME BENEFITS

While Texas has Income Benefits, the indemnity benefits do not use the same names as income benefits in other states.  The Income Benefits in Texas are designated as follows:

1.    Temporary Income Benefits (TIBs) – TIBs are calculated  by multiplying the AWW by 70 percent.  The maximum TIBs that can currently be paid is $539.00 per week, but it changes each year.   The employee is paid TIBs if the employee is off work for more than 7 days due to a work-related injury or illness.  Benefits start on the eighth day off work.  If the employee is off work more than 14 days, TIBs are retroactive back to the first day missed from work.  TIBs end on the date the employee is physically able to earn the same wages he was earning before the injury, OR, on the date the medical provider determines the employee has reached maximum medical improvement (MMI), OR, at the end of 104 weeks (which makes Texas among just a few jurisdictions which place a two year time limit on temporary benefits).

2.    Impairment Income Benefits (IIBs – pronounced “ibs”) –  IIBs are paid when the employee suffers a permanent impairment from a work-related injury or illness.  IIBs start the day after an employee has reached MMI.  If the employee has not reached MMI before 104 weeks after the date of work-related injury or illness begin, the Texas law states the employee is declared at MMI and can start receiving IIBs for his injury.  A doctor certified by the Texas Division of Workers' Compensation is required to examine the employee and access an impairment rating to the body as a whole.  For each one percent of disability, the employee is paid 3 weeks of benefits at 70 percent of his average weekly wage, not to exceed $377.00 per week.  For example, if the employee is given a ten percent impairment rating, the employee will receive 30 weeks of IIBs (10 x 3 weeks for each one percent).

3.    Supplemental Income Benefits (SIBs) – SIBs have to be approved by the Division of Workers' Compensation for the first quarter year (3 months) they are paid.  SIBS are income benefits paid monthly to employees who meet the entitlement requirements of:

·      has an impairment rating of 15% or higher,

·      has not returned to work because of the impairment, or has returned to work at a reduced wage and is earning less than 80% of the AWW at the time of the injury,

·      has made a good faith effort to find job that can matches his ability to work, and

·      did not take his IIBs in a lump sum payment.

SIBs have their own unique way of being calculated.  The employee is paid 80% of the difference between 80% of the AWW (earned prior to the injury) and the AWW earned after the work related injury.  [Why they don't just say 64% of the difference between your old wage and what you make now, I don't know].  Each month the employee will receive one check for 4.34821 weeks of the SIBs.  The employee has to apply for SIBs every three months and provide proof that he has:

·      has looked for work each week of the prior three months,

·      has current medical documentation that his work-related injury or illness keeps him from working at the level he was prior to the injury, and

·      has provided full cooperation with the Texas Department of Assistive & Rehabilitative Services, or a private provider of vocational assistance.

After the first three months, the SIBs application is sent each quarter to the insurer or self-insured by the employee, confirming to the insurer or self-insured that the employee has looked for work, is unable to work or has not found work that matches his disabilities, and is pursuing vocational rehabilitation.  The SIBs can continue for 401weeks.

4.    Lifetime Income Benefits (LIBs) – There are some specific work-related injuries that entitle an employee to LIBs.  They are:

·  Loss of both feet at or above the ankle

·  Loss of both hands at or above the wrist

·  Loss of one foot at or above the ankle and loss of one hand at or above the wrist

·  Total and permanent loss of sight in both eyes

·      A spinal injury that results in permanent and complete paralysis of both arms, or both legs, or one arm and one leg

·  A traumatic brain injury that results in incurable insanity or imbecility

·  Third degree burns over at least 40% of the body that require skin grafting

·  Third degree burns covering the majority of both hands or one hand and the face.

    LIBs are paid at 75% of the AWW but cannot exceed the TIBs rate, currently $539.00 per week.  LIBs begin when the medical provider certifies to the Division of Workers' Compensation that one of these eight conditions have been meet and will continue until the end of the employee's life.

MEDICAL BENEFITS

Medical Benefits in Texas are the same as in other jurisdictions.  The necessary cost of medical care is paid by the insurer or self-insured to the medical provider.  It covers only the work-related injury or illness and does not pay for any non-work related medical care, even if it provided at the same time as the medical care for the injury.

The employee selects the choice of doctors in Texas if the employer is not a member of a certified workers' compensation health care network.  If the employer is a member of a certified network, the employee must obtain his medical care through medical providers within the network, if the employee lives in the area covered by the certified network.  If the employee is not employed by an employer who has joined a certified network, the employee selects his own physician but it cannot be a physician who has not been admitted to, or who has been removed from, the Division of Workers' Compensation Approved Doctor list.  Once an employee has selected a medical provider, either in a network or approved by the Division, the employee cannot change medical provider without approval from the Division of Workers' Compensation. 

DEATH BENEFITS

Death Benefits are paid to the surviving spouse, minor children, dependent grandchildren or other dependents of the deceased employee.  If there are no dependents of a deceased employee, the death benefits are paid to the deceased non-dependent parents or siblings.  The death benefit is 75% of the deceased employee's average weekly wage, but cannot exceed the state weekly wage maximum.

The death benefits start the day after the employee dies.  A surviving spouse will receive death benefits for the remainder of the spouse's life unless the spouse remarries. If the deceased employee has both a surviving spouse and dependent children, the surviving spouse gets one-half of the death benefit and the second half of the death benefit is divided among the dependent children.  Children remain eligible for the death benefit until they are 18 years old, or until age 25 if they are enrolled full time at an accredited educational institution. Children with physical or mental disabilities remain eligible for death benefits until they die or no longer have the disability.

Other family members who are dependent upon the deceased employee such as siblings, parents and grandparents can collect death benefits if there are no eligible spouse, children or grandchildren.  These family members can collect death benefits for 364 weeks.   If there are no dependents of the deceased employee, the non-dependent parents of the employee can collect death benefits for 104 weeks.  If there are no eligible beneficiaries for death benefits, or if the eligibility of the beneficiaries ends in less than 364 weeks, the remaining death benefits are paid to the Subsequent Injury Fund. (workersxzcompxzkit)

While Texas workers compensation has it oddities, it can be understood by the non-Texan with a little effort. 

Author R. Shafer, executive vice president, Amaxx Risks Solutions, Inc. has worked successfully for 20 years with many industries to reduce Workers’ Compensation costs, including airlines, healthcare, manufacturing, printing/publishing, pharmaceuticals, retail, hospitality and manufacturing. She can be contacted at: RShafer@ReduceYourWorkersComp.com or 860-553-6604.

Free Podcast: KNOW the new OSHA recordkeeping rules – or risk fines and criminal penalties.
Click Here: http://208.106.129.109/gallagher/podcast/Non_Compliance_with_Recordkeeping_Standards/
 


Do not use this information without independent verification. All state laws vary. You should consult with your insurance broker or agent about workers' compensation issues.
 
© 2010 Amaxx Risk Solutions, Inc. All rights reserved under International Copyright Law. If you would like permission to reprint this material, contact Info@ ReduceYourWorkersComp.com. 

 

5 Reasons Employers Need Employers Liability Insurance

Most employers understand workers’ compensation coverage, but if you ask them about their employers’ liability coverage, either you will get a blank look or they confuse employers’ liability coverage with their general liability insurance policy. 
 
Employers’ liability could be considered the step-sister to workers’ compensation coverage. Employers’ liability insurance coverage, referred to as “stop gap coverage” in some jurisdictions, is designed to protect the employer from the injury, disease or death claims made by employees caused by workplace practices or conditions that are not covered by workers’ compensation.  
 
While most employers initial reaction is to think all claims for injuries, disease or death are covered by workers’ compensation, there are exceptions. Workers’ compensation is often portrayed as an exclusive remedy for all work related injuries. However, plaintiff attorneys will look for ways around the workers’ compensation statutes as they strive for a bigger payday. The more common exceptions to workers’ compensation coverage found by these plaintiff attorneys would include:   
            
1. Intentional acts/torts by the employer.
[Example – the coal mine operator who knows there is excessive methane gas in the coal mine, but send the workers in anyway.]
 
2. Third party cross claims.
[Example – the employee falls off a ladder, but instead of filing a work comp claim, files a lawsuit against the ladder manufacturer. The ladder manufacturer then files a third party cross claim against the employer for failure to properly maintain the ladder.]
 
3. Dual capacity claims.
[Example – your company manufacturers farm machinery, the employee is driving the new combine off the assembly line, the seat falls off, the employee lands hard on the floor and files a products liability claim against your company.]
 
4. Diseases or injuries excluded by the state workers compensation statutes.
[Example – the employee develops arthritis from the repetitive aspects of her job. Your jurisdiction does not recognize arthritis as a work comp injury.]
 
5. Consortium and other loss of services to family members.

  

General liability insurance companies wanting to remain profitable have excluded these same exceptions from their coverage as they do not want to cover work-related injury claims. The smart employer wishing to stay out of trouble will purchase employers’ liability insurance to cover the gap in coverage between workers’ compensation policy and the general liability policy.  
 
The Workers’ compensation insurance company knowing that these exceptions to work comp coverage are not routine or every day claims, will add employers’ liability insurance coverage as a separate section (part 2) to their policy for an additional premium. Employers’ liability insurance and workers’ compensation insurance combined together provide the employer with greater overall coverage and eliminates more financial risk exposure. 
 
Employers’ liability coverage is compulsory in some jurisdictions but elective in other jurisdictions. Where the coverage is elective it is still is normally combined with the workers’ compensation policy. Even if it is offered as a separate policy, it is recommended that it be purchased as the premium is relatively small but the potential for loss can be large. In the jurisdictions where employers’ liability insurance is compulsory, the employer who fails to have the coverage can be subject to fine or even face the force closure of the business—just like what happens when there is a failure to have workers’ compensation coverage. 
 
In the four monopolistic states of North Dakota, Ohio, Washington and Wyoming, it is recommended for employers to purchase employers’ liability insurance to protect their company from the gap in coverage between the state fund and their general liability insurance. This is can be accomplished by buying the two part workers’ compensation and employers’ liability policy. (Don’t worry, the workers’ compensation insurance company knows it will not be paying any work comp claims in the monopolistic state and will adjust the premium accordingly. It comes with an endorsement that states Part 1 – Workers’ compensation will not apply in the monopolistic states).
 
Unlike workers’ compensation which will pay the employee’s benefits regardless how high the benefits may be in catastrophic case, employers’ liability insurance is normally written with a maximum amount—a policy limit—on the amount it will pay per accident, per disease or bodily injury by disease.   Like other forms of liability coverage, the policy limit is determined by the insured at the time of purchase, with higher limits carrying a higher insurance premium.
 
Even though employers’ liability insurance is meant to cover the gap between workers’ compensation insurance and general liability insurance, it also has exceptions to the coverage it provides. The employers’ liability policy will not provide coverage in a state where the employer’s work comp policy is not in force and it normally specifically excludes the crew of aircraft. Also, employers’ liability insurance is not discrimination insurance. It will not pay for employee claims for age discrimination, racial discrimination, sexual orientation discrimination, sex discrimination or wrongful discharge.   (workersxzcompxzkit)
 
While employers’ liability claims are rare, the employer needs to understand the nature of the employers’ liability insurance to fully protect their company. If your workers’ compensation insurance company does not automatically attach it to your workers’ compensation policy, it is recommended you request it.
 
Author Rebecca Shafer, J.D. President of Amaxx Risk Solutions, Inc. has worked successfully for 20 years with many industries to reduce Workers’ Compensation costs, including airlines, healthcare, manufacturing, printing/publishing, pharmaceuticals, retail, hospitality and manufacturing. She can be contacted at:   RShafer@ReduceYourWorkersComp.com or 860-553-6604.
 
Podcast/Webcast: Occupational Health Strategies
Click Here:

WC Calculator: http://www.reduceyourworkerscomp.com/calculator.php


Do not use this information without independent verification. All state laws vary. You should consult with your insurance broker or agent about workers’ comp issues.
 
© 2010 Amaxx Risk Solutions, Inc. All rights reserved under International Copyright Law. If you would like permission to reprint this material, contact Info@ ReduceYourWorkersComp.com.

The Basics of Captive Insurance Companies for Workers Compensation

A captive insurance company is an insurance company owned by the parent company or a group of businesses (hereafter referred to as the parent company) for the purpose of insuring its own risk. The primary business of the parent company is normally outside of the insurance field. By the parent company setting up its own insurance company, the parent company utilizes the captive insurance company as a risk management technique to better manage the associated cost of insurance, whether it is for workers' compensation, liability, property or other loss exposure of the parent company.
 
Captive Structure:
By definition, a captive insurance company writes insurance coverage exclusively for the parent company. As the insurance company is owned by the parent company/policyholder, the insurance company is “captive” to the policyholder.
 
While the parent company is often a large corporation, the parent company can be a group of businesses in the same business, for example several home builders within a state, or several owners within a professional sports league. When the parent of the captive is one company, the captive is called a pure captive. When the parent of the captive is a group like the professional sports league, the captive is referred to as a group captive
 
Captives can be either domestic or offshore. The first captives were offshore, primarily in Bermuda, as the capitalization requirements to start an insurance company were lower than the capital requirements in the United States. This allowed the parent company to create the captive insurance company with a lower initial investment and lower reserves. About 20 countries have captive insurance laws with Bermuda and the Cayman Islands having the greatest concentrations of offshore captive insurance companies.
 
A few states recognizing the potential to bring additional financial business into their states have revised their insurance laws to permit and encourage captive insurance companies. States with statutes providing for domestic captive insurance companies include Vermont, Hawaii, Nevada, Utah, New York, Arizona and South Carolina. 
 
Financial Benefits:
Risk transfer is the primary benefit of the captive insurance company. The parent company transfers the risk of loss to the captive insurance company. While this could be accomplished by the purchase of insurance from a conventional insurance company, the parent company reaps other benefits as well.
 
The parent company pays the insurance premium to the captive insurance company. The amount of the premium has to be reflective of the anticipated losses. The Generally Accepted Accounting Principles (GAAP) used in the United States do not allow non-insurance companies to accrue or expense anticipated losses until they are measurable and owed. The one exception to the GAAP is for insurance companies to accrue for incurred but not reported losses.   This is a major financial advantage to the parent company who has a captive insurance company.
 
Insurance premiums charged by the conventional insurance company include not only the anticipated cost of claims, but also include the cost of operations (rent, salaries, benefits, etc.) and their profit. Through the use of a captive insurance company, the parent company can reduce the amount paid for the cost of operations and eliminates the amount paid that becomes the profit for the conventional insurance company.
 
When the loss experience of the captive is lower than expected, the premium paid over and above the amount of the combined losses is kept by the captive insurance company. In essence, as the captive insurance company is owned by the parent company, the parent company benefits from the lower cost of loss.
 
Claims control is also greater with a captive insurance company. The parent company can dictate what the claims procedures will be, who will handle the claims and exercise some control over the claim payments (this varies by jurisdiction). The delays and hassles often associated in dealing with the claims department of the conventional insurance company are reduced or eliminated.
 
The use of a captive insurance company also permits the parent company some control over outside market conditions. When the number of claims and associated losses are lower than normal, the captive insurance company will increase its reserves. When the number of claims and associated cost are higher than normal, the captive insurance company will normally only increase its premium cost to the parent company by the amount necessary to cover the losses. If the parent company were using a conventional insurance company, the premium cost would be greater as the conventional insurance company's increased premium would also reflect the increase necessary to maintain their profit margin.  (workersxzcompxzkit)
 
Summary:
Captive Insurance Companies create a financial advantage to the parent company by allowing the parent company greater control of their insurance cost. As more businesses understand the financial advantages of captives, the number of captive insurance companies will continue to grow.
 
Author Rebecca Shafer, J.D. Risk Consultant, Amaxx Risks Solutions, Inc. has worked successfully for 20 years with many industries to reduce Workers’ Compensation costs, including airlines, healthcare, manufacturing, printing/publishing, pharmaceuticals, retail, hospitality and manufacturing. She can be contacted at:   RShafer@ReduceYourWorkersComp.com or 860-553-6604.
 
Podcast/Webcast: Occupational Health Strategies
Click Here:

WC Calculator: http://www.reduceyourworkerscomp.com/calculator.php


Do not use this information without independent verification. All state laws vary. You should consult with your insurance broker or agent about workers' comp issues.
 
© 2010 Amaxx Risk Solutions, Inc. All rights reserved under International Copyright Law. If you would like permission to reprint this material, contact Info@ ReduceYourWorkersComp.com.

Buying Workers Compensation in Monopolistic States

Workers’ compensation coverage is required in all jurisdictions, but the methods to provide the coverage vary from self-insurance to workmans’ compensation insurance companies to state assigned risk pools to monopolistic states.   Companies who do not have operations in a monopolistic state may wonder how does workers' compensation operate in a monopolistic state.  

In a true monopolistic state, the state government insures all employers through a compulsory state fund and is the exclusive provider of coverage. Instead of purchasing the workers' compensation insurance coverage from an insurance company, the workers' compensation coverage is provided by the state government.   Open markets with competition from private workers' compensation insurance companies is not permitted.
 
Over the last several decades the number of states classified as monopolistic states has dwindled from about twenty states 50 years ago to now just 4 states and two territories. The remaining jurisdictions in the monopolistic category are North Dakota, Ohio, Washington state, Wyoming, Puerto Rico and the Virgin Islands. In the last ten years three monopolistic jurisdictions, Nevada, West Virginia and Guam have switched from a monopolistic state program to a free market system of workers compensation insurance. 
 
The states of Ohio and Washington have loosen their monopolistic state grip on the workers' compensation market in their states. While they do not permit workers' compensation insurance companies to compete in their states, they do permit employers to set-up a self insurance program to handle their own work comp claims.   However, the restrictions and strict requirements for self-insurance bar all companies except the financially strong large companies.
 
Wyoming is a monopolistic jurisdiction for hazardous operations and for other specific categories and for defined operations. If the employer does not fit into one of categories requiring the purchasing of workers compensation coverage from the state, then the employer has the option of using the state fund or purchasing coverage from a workers’ compensation insurance company.
 
North Dakota is the only state that meets the pure definition of a monopolistic state for workers compensation. There are no options for self insurance or to purchase workers compensation coverage from the private market. While there are a limited number of employers excluded (real estate agents, independent contractors, farm and ranch workers, domestic employees, newspaper delivery employees) from the workers' compensation requirement, all other employers are required to have workers' compensation insurance and are required to buy it from the State of North Dakota.
 
Ohio is the largest of the monopolistic jurisdictions. In 2009 the Ohio state fund had 132,549 work comp claims filed (down sharply from 159,611 in 2008 and 171,692 in 2007). Of the 132,549 claims filed, it approved 118,955 claims. Ohio had 257,012 employers covered by the state fund and 1,188 employers who were self-insured. The ratio of employers in the state fund   to the employers who are self-insured is 216 to 1, reflective of the restrictions and requirements for a company to self-insured in Ohio. 
 
Monopolistic jurisdictions provide risk managers or workers' compensation managers of multi-state companies with challenges that are not faced in the other states and territories including:
 
1.  Making a separate purchase of coverage to provide workers' compensation in each of the monopolistic jurisdictions where they have employees.
 
2.  Conflict of interest between the state work comp agency that handles the work comp claims and the state board or agency that handle claim dispute resolution.
 
3.  Providing work comp coverage for employees of a monopolistic state who perform work in other states.
 
4.  Providing work comp coverage for employees from other states who perform work in a monopolistic state.
 
5.  The monopolistic state agency does not provide employers' liability coverage.
 
6.  Employee classification for premium rating is unique to each monopolistic state.
 
Basically, the risk manager or work comp manager has to learn a completely different system when they have work comp exposure in a monopolistic state.
 
The monopolistic jurisdictions due to their structure and the way the operate have their own issues to deal with. Some of the problems include:
 
1.     Political interest in the setting of work comp premium rates. The state agency is not in business to make a profit like a workers’ compensation insurance company. Hence, if the premiums are set too low, the state (make that the taxpayers of the state) get to subsidize the premium deficiency.
 
2.     With no competition, the quality of customer service and the quality of claim service can be lacking. 
 
3.    The state agency is required to take all employers who apply. They cannot deny a policy to a poor risk like a workers' compensation insurance company would do.
 
4.    Claim fraud is prevalent. Depending on whose stats you are looking at, work comp claim fraud is involved in an estimated 5% to 10% of all work comp claims. Remember the 118,855 approved work comp claims in Ohio in 2009?   Ohio prosecuted only 222 cases of work comp fraud or less than two-tenths of one% of the claims filed. (workersxzcompxzkit)
 
How long the remaining monopolistic jurisdictions will continue is unknown. Politics in each of the monopolistic jurisdictions will determine whether or not the employers within their states will continue to purchase coverage from the state or if the market will be opened up to competition. The free-market system of insurance companies competing for business has shown itself to be the better approach by creating better customer service and less red-tape for the employers.  
 
Author Rebecca Shafer, J.D. Consultant, President, Amaxx Risks Solutions, Inc. has worked successfully for 20 years with many industries to reduce Workers’ Compensation costs, including airlines, healthcare, manufacturing, printing/publishing, pharmaceuticals, retail, hospitality and manufacturing. She can be contacted at:  RShafer@ReduceYourWorkersComp.com or 860-553-6604.
 
Podcast/Webcast: Occupational Health Strategies
Click Here:

WC Calculator: http://www.reduceyourworkerscomp.com/calculator.php


Do not use this information without independent verification. All state laws vary. You should consult with your insurance broker or agent about workers' comp issues.
 
© 2010 Amaxx Risk Solutions, Inc. All rights reserved under International Copyright Law. If you would like permission to reprint this material, contact Info@ ReduceYourWorkersComp.com.

California County Saves Workers Compensation By Large Deductible and Internal Claims Admin

The Santa Barbara (California) County Board of Supervisors approved a new workers’ compensation program reported to save the county more than $3 million over three years.

The decreased premium
is expected to take care of expenses for all the county’s industrial injuries and illnesses incurred from July 1, 2010, to June 30, 2011.

According to the Lompoc Record
, the board decided to take advantage of a new program offered by the California State Association of Counties (CSAC), providing better service at a lesser risk to the county, county staff said.

The board members
backed the change because the fire and sheriff’s departments would experience a combined $681,000 in savings. These two departments pay more than 50% of the county’s workers’ comp premiums.

For over three decades
, the county has been a member of the CSAC Excess Insurance Authority, “a member-directed risk sharing pool of counties and public entities,” according to county staff.

The county
was
enrolled in one of its compensation programs and the county was mandated to absorb the risk for each claim up to $500,000 and manage all the necessary administrative work.(workersxzcompxzkit)

The recently approved CSAC program
, known as Primary Workers’ Compensation, transfers and moves all
of the county’s risk around to a bigger pool, thus lowering the county’s costs.

Podcast/Webcast: Occupational Health Strategies
Click Here:

WC Calculator: http://www.reduceyourworkerscomp.com/calculator.php

Do not use this information without independent verification. All state laws vary. You should consult with your insurance broker or agent about workers’ comp issues.

© 2010 Amaxx Risk Solutions, Inc. All rights reserved under International Copyright Law. If you would like permission to reprint this material, contact Info@ ReduceYourWorkersComp.com.

Know The Types of Alternative Markets

What is an Alternative Market?
 
Alternative Markets refers to insuring for risk without using the conventional insurance company approach. There are several methods making up the alternative markets including pure captives, group captives, rent-a-captives, public entity pools, self-insurance plans, large deductible programs, risk retention groups and purchasing groups. The following is a brief explanation of each method.
 
Pure Captives:
A pure captive insurance company has a single parent company and insures only the risk of the parent company. The pure captive insurance company will have an insurance charter to operate as an insurance company. The parent company will invest the money to set up and start the captive insurance company. The parent company controls the decisions in regards to underwriting, investments and claim operations. The pure captive insurance company will normally have an excess insurance carrier or a re-insurer to cover the cost of claims if they exceed a predetermined limit.
 
Group Captives:
A group captive insurance company is jointly owned by a group of companies having a homogeneous interest and similar exposures to loss. It is a closely held insurance company with the insurance business being supplied and controlled by its owners. A group captive will operate the same as the pure captive and differs only in having multiple owners as opposed to a single owner.
 
Rent-A-Captive:
A rent-a-captive (also known as a sponsored captive) is a company providing captive insurance company services and facilities to others for a fee. The rent-a-captive is normally run by a fronting insurance carrier, but can be operated by a broker or a re-insurer.   The fees to obtain membership in the rent-a-captive are much lower than what would be necessary monetarily to start a pure captive. The rent-a-captive usually provides services to mid-size companies without the resources to start their own captive. The rent-a-captive differs from the pure captive or group captive in that the member is not an owner and does not have voting control of the captive. The rent-a-captive is normally divided into “cells” in which each member is legally separated from the rest of the members and separated from the liabilities of the other members and the rent-a-captive itself.
 
Public Entity Pools:
Public entity pools or government pools are a form of risk management where small or mid-size local governments within a single state—towns, small cities, counties, water districts, parks & recreation, public bus lines, etc.,—join together to form a non-profit association to share the risk of loss. The members of the pool collectively self-insure their insurance exposures through a participation agreement. The pool will have a joint underwriting operation in which the participants in the pool assume a predetermined and fixed exposure in all business written.
 
Self-insurance Plans:
A self-insurance plan describes a company setting aside a pre-determined amount of money to pay for future claims. Using available underwriting information and the laws of large numbers, the amount of money needed to pay future claims is actuarially calculated. This amount of money is placed in reserve to pay the losses as they occur. Like a captive insurance company, the self-insurance plan will normally have an excess insurance carrier or a re-insurer to cover the cost of claims if they exceed a predetermined limit.
 
Workers’ compensation coverage has relatively predictable amounts of risk and is measurable enough to make it appropriate for self-insurance. Most of the jurisdictions allow companies to self-insure for work comp. Self-insurance plans are the alternative market approach most used in the work comp field.
 
Large Deductible Programs:
In a large deductible program the insured purchases a policy of insurance from an insurance company. The insured is responsible for reimbursing the insurance company for each claim in the policy period up to a dollar limit. The insured will also have a maximum amount of exposure. To illustrate, the insured would reimburse the insurance company the total amount paid on each claim under $250,000 (the large deductible amount), but when the insured has paid a total of $1,000,000 (a stop loss limit) on all claims, the insurance company will take over and pay all further claim cost during the policy period. The allocated loss adjustment expense (the cost of handling the claim) is often included in the claim cost in the large deductible program.
 
Risk Retention Group:
A risk retention group is an insurance company owned by the policyholders. Membership in the group is limited to companies in the same type of business. The risk of loss is spread across the group members. Risk retention groups are normally used for medical malpractice, professional liability and products liability. Risk retention groups are normally not used for workers’ compensation. (workersxzcompxzkit)
 
Purchasing Group:
In Texas, the state statutes allow companies in similar industries to join together in a purchasing group to buy their workers compensation coverage. The companies in the group receive a discount from the workers' compensation carrier. If the insurance company is set up as a mutual company, the members may also receive a group dividend if the insurance company has a profitable year. The purchasing group may also join together to purchase health insurance to receive a group discount. 

Author Rebecca Shafer, J.D., President, Amaxx Risks Solutions, Inc. has worked successfully for 20 years with many industries to reduce Workers’ Compensation costs, including airlines, healthcare, manufacturing, printing/publishing, pharmaceuticals, retail, hospitality and manufacturing. She can be contacted at: RShafer@ReduceYourWorkersComp.com or 860-553-6604.

Podcast/Webcast: Occupational Health Strategies
Click Here:

WC Calculator: http://www.reduceyourworkerscomp.com/calculator.php


Do not use this information without independent verification. All state laws vary. You should consult with your insurance broker or agent about workers' comp issues.
 
© 2010 Amaxx Risk Solutions, Inc. All rights reserved under International Copyright Law. If you would like permission to reprint this material, contact Info@ ReduceYourWorkersComp.com.

GREAT BRITAIN Shop Owner Fails to Carry Employers Liability Insurance

For failing to carry compulsory Employers’ Liability Insurance (workers’ compensation insurance) a shop owner was fined £2,100 ($3,147.00) and ordered to pay £1,850.80 ($2,773.00) in costs following an investigation by the Health and Safety Executive. HSE’s investigation found the employers violated the insurance requirement four times.
 
While public liability insurance is generally voluntary, employers' liability insurance is compulsory and enables an employer to meet any costs relating to employees' injuries or illness whether caused on or off site.
 
HSE Inspector Andrea Robbins, said there is no excuse for not having the insurance. "Employers' Liability insurance is a legal requirement for all employers in Great Britain," Robbins commented. "As well as being a legal requirement, the insurance offers important protection for employers if an employee is injured or suffers from disease as a result of their work. (workersxzcompxzkit)
 
"The failure of employers to insure is seen as a serious matter and HSE will continue to refer appropriate cases to the magistrates for their consideration."

 

Author Robert Elliott, executive vice president, Amaxx Risks Solutions, Inc. has worked successfully for 20 years with many industries to reduce Workers' Compensation costs, including airlines, health care, manufacturing, printing/publishing, pharmaceuticals, retail, hospitality and manufacturing. He can be contacted at: Robert_Elliott@ReduceYourWorkersComp.com or 860-553-6604.


Podcast/Webcast: Claim Handling Strategies
Click Here:

http://www.workerscompkit.com/gallagher/podcast/  Claim_Handling_Strategies/index.php 
 


Do not use this information without independent verification. All state laws vary. You should consult with your insurance broker or agent about workers' comp issues.
 
©2010 Amaxx Risk Solutions, Inc. All rights reserved under International Copyright Law. If you would like permission to reprint this material, contact Info@ ReduceYourWorkersComp.com.

OKLAHOMA Sale of State Workers Comp Agency Opposed by Attorney General

A plan to sell Oklahoma's workers' compensation insurance agency is opposed Attorney General Drew Edmondson because businesses may then be required to pay higher rates. Edmonson said pending legislation would lead to privatization of CompSource Oklahoma, bad news for businesses and consumers. 

CompSource was formed in 1933 to keep workers' comp prices affordable and competitive. It serves as a last resort for high-risk employers who are unable to afford private insurance.According to Edmondson, if CompSource Oklahoma is acquired by another insurer, prices could increase and new and beginner companies may not be able to afford workers' comp insurance.(workersxzcompxzkit)
 
 
CompSource reportedly writes approximately 35% the state’s workers' comp policies.

 

Author Robert Elliott, executive vice president, Amaxx Risks Solutions, Inc. has worked successfully for 20 years with many industries to reduce Workers' Compensation costs, including airlines, health care, manufacturing, printing/publishing, pharmaceuticals, retail, hospitality and manufacturing. He can be contacted at: Robert_Elliott@ReduceYourWorkersComp.com or 860-553-6604.


Podcast/Webcast: Claim Handling Strategies
Click Here:

http://www.workerscompkit.com/gallagher/podcast/  Claim_Handling_Strategies/index.php 
 


Do not use this information without independent verification. All state laws vary. You should consult with your insurance broker or agent about workers' comp issues.
 
©2010 Amaxx Risk Solutions, Inc. All rights reserved under International Copyright Law. If you would like permission to reprint this material, contact Info@ ReduceYourWorkersComp.com.

Risk Management and Government Pools How They work and Why

What are Government Pools?
Government pools are a form of risk management where small local governments within a single state—towns, small cities, counties, water districts, parks & recreation, public bus lines, etc.,—join together to form a non-profit association to share the risk of loss. The members of the pool collectively self-insure their insurance exposures through a participation agreement. For more Information: www.reduceyourworkerscomp.com
Most government pools operate along the same principles as an insurance company, but the membership is limited to the governmental units within their state. The members of the government pool elect a Board of Trustees from their members, The Trustees are responsible for the strategic direction of the pool. The Trustees can operate the pool or they can select a management team to oversee the management duties of the pool.
Why are They Formed?
During the times of hard insurance markets (when underwriting standards become more rigid and insurance premiums increase due to higher than expected insurance claim cost), it often becomes very difficult or impossible for local governments to buy certain types of insurance coverage from insurance carriers. Insurance companies often look at governmental entities as a higher risk, resulting in escalating premiums if they provide insurance coverage at all. 
Government pools are normally created to provide both a consistent and affordable means of insurance coverage. The pools are not designed to create an underwriting profit, but to provide the insurance coverage needed. Therefore, the rates paid by pool members do not include an element of profit, making the overall rates paid by pool members more affordable.
What are Their Objectives?
The primary objective of government pools is to meet the insurance needs of the municipal governments and governmental entities that are members of the pool. By joining together, the members of the pool can jointly manage risk and prevent changes in the insurance market from creating financial difficulties for their members’ budgets. The government pool provides the members an effective way to control the cost of insurance.
What do They Do?
Most government pools are multi-line providers of health insurance, liability insurance, workers' compensation insurance and property insurance to their members. The government pools not only provide the insurance coverage, they also manage the member's claims either through their own staff of adjusters or by providing oversight of a Third Party Administrator hired to handle the insurance claims.
In addition to providing insurance coverage, the government pools usually provide loss control services to the members. They encourage members to educate themselves on how to prevent or minimize their losses.
What is the Member's Contribution?
The members' contribution is calculated along the same lines principles as they would be with an insurance company.   For workers' compensation the contributions are based on each member's payroll with rates established by the Board of Trustees for the government pool. Based upon the pool's reserves and assets, the rates charged to the members may be reduced upfront by the pool's management. 
Pool members are given the option to lower their insurance cost even further. If the member can afford to carry a high deductible, they can elect to do so. The pool's claims adjusting office will handle the claim to a conclusion and then have the member reimburse the amount of their deductible to the pool.
What are Their Benefits?
In addition to providing a lower cost for insurance coverage, government pools often provide most or all of the benefits of a large insurance company, including:
1.     Payroll audits are usually conducted annually at no cost to the members
2.     The pool will have on staff or under retainer legal counsel to assist the members in local government specific issues
3.     Loss control programs
4.     Safety programs
5.     Guidance is provided to members on risk management issues and insurance issues
6.     Claim handling services are provided
  1. Electronic claim reporting or toll free claim reporting
  2. PPO network
  3. Medical bill review
  4. Pharmacy program
  5. Nurse case managers
  6. Vocational case managers
  7. Litigation management
Summary:
Government  entities can lower their overall cost of insurance by participating in a risk-sharing governmental pool. (workersxzcompxzkit) The non-profit pools, owned and operated by the members, save the local taxpayers money by reducing the operating cost of the local governmental entity. 

Author Robert Elliott, executive vice president, Amaxx Risks Solutions, Inc. has worked successfully for 20 years with many industries to reduce Workers' Compensation costs, including airlines, health care, manufacturing, printing/publishing, pharmaceuticals, retail, hospitality and manufacturing. He can be contacted at: Robert_Elliott@ReduceYourWorkersComp.com or 860-553-6604.


Podcast/Webcast: Claim Handling Strategies
Click Here:

http://www.workerscompkit.com/gallagher/podcast/  Claim_Handling_Strategies/index.php 
 

Do not use this information without independent verification. All state laws vary. You should consult with your insurance broker or agent about workers' comp issues.

 
©2010 Amaxx Risk Solutions, Inc. All rights reserved under International Copyright Law. If you would like permission to reprint this material, contact Info@ ReduceYourWorkersComp.com.

Three Great Ways to Nail Down Workers Comp Costs

Can you answer this?
Question:   What are the three sources driving your workers’ comp costs UP or down?
Answer:   State Rates, Experience Mods and, YOU, the employer.
 
Are you surprised to learn you are one of them?   True, your state and your insurer are the primary cost drivers and the rates and premiums may be etched in stone, but the employer (or the broker) can do many things to wrangle a bigger, better deal for yourself and your company. It’s no secret.  The 2009 RIMS Benchmark Survey WC Best Practices indicated that companies with brokers (both commercially insured and self-insured) have better best practice rankings than those without brokers.

1.  State Rates
Each state determines rates by classifications for job functions. Obviously, roofers are rated higher rate than computer analysts because the risk is greater. Roofers who stand back to admire their work have a much higher probability of falling off the roof than computer analysts have of falling off their chairs. 
 
Obtain the state classifications from the National Council on Compensation Insurance (NCCI), your state workers’ comp commission or department and make sure your employees’ job functions are classified correctly. http //reduceyourworkerscomp.com/resources.php

2.  The Experience Mods and the insurance company
The experience mod is a powerful number and you must pay attention to it. Experience mods are factored in by insurers after determining where you stand with respect to frequency and severity of work related injuries. Employers with a history of frequent and severe work related injuries factor in at a much higher experience mod than those with less eventful histories. A mod of 1.0 or less – GOOD; more than 1.0 — BAD.
1. Be sure your insurer has the latest, correct employee classifications.
2. Ask about preferred policy holder insurance packages. 
3. Ask about dividends or other financial incentives to get a break on your premium.
4. If you don’t like what you’re hearing from your insurer, shop around for a better deal, or shop around for a broker who has more marketplace clout to get your a better deal. Just a thought…
 
If you cannot obtain coverage, contact you state for coverage. The state may be obligated to provide coverage for those companies unable to obtain coverage otherwise.

3.  Your Safety and Workers’ Comp Management Track Record
You, the employer, are the third workers’ compensation cost driver. This means, even though the state and insurers have the final say in what you pay, you can influence your premium rates.
1. Establish and vigilantly maintain aggressive safety and workers’ compensation management programs at work. 
2.  In-service employees regularly on safety precautions to prevent work related injuries. 
3. If and when work related injuries do occur, aggressively pursue a workers’ comp management strategy,  keeping employees engaged and focused on returning to work in a modified duty job at the earliest possible date. (workersxzcompxzkit)

When your
insurer sees evidence of safety and workers’ comp management, i.e., a reduction in frequency and severity of work-related incidents, a reduction in convalescence time, an increase in return to work events – you are then in a position to bargain for more favorable premium rates.

Author Robert Elliott, executive vice president, Amaxx Risks Solutions, Inc. has worked successfully for 20 years with many industries to reduce Workers' Compensation costs, including airlines, health care, manufacturing, printing/publishing, pharmaceuticals, retail, hospitality and manufacturing. He can be contacted at: Robert_Elliott@ReduceYourWorkersComp.com or 860-553-6604.


Podcast/Webcast: Claim Handling Strategies
Click Here:

http://www.workerscompkit.com/gallagher/podcast/  Claim_Handling_Strategies/index.php 
 


Do not use this information without independent verification. All state laws vary. You should consult with your insurance broker or agent about workers' comp issues.
 
©2010 Amaxx Risk Solutions, Inc. All rights reserved under International Copyright Law. If you would like permission to reprint this material, contact Info@ ReduceYourWorkersComp.com.

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