The Alternative Market Can Give You Control In Workers Comp Savings

What is the Alternative Market?

 
The Alternative Market or Alternative Risk Transfers (ARTs) are insurance programs that typically keep some part of the risk instead of transferring all of the risk as in a “traditional” insurance policy. The Alternative Market has various types of programs like:

·         Self-insurance

·         Captives

·         Risk Retention and Risk Purchasing Groups (RRGs)

·         Rent-A-Captives

·         Sponsored Captives

·         Insurance pools

·         Association Groups


The purpose of all Alternative Risk Transfers programs is to recoup or retain the underwriting profit. Companies that invest in loss control and maintain tight controls on their claims often have lower losses. In the traditional market, the insurance carrier collects a premium and uses it to pay the losses of the good and the bad companies.

 
Self-insurance
 
Some employers self-insure through insurance pools. They set aside funds in anticipation of workers' compensation claims instead of buying insurance. This is a cost-saving method for safety-oriented firms. In states where this is allowed, many large employers self-insure. Many small businesses form groups to insure themselves and decrease risks.
 

Captives
 
This is an insurance company that is controlled by its owners. A captive usually insures businesses that are related to it through common ownership. The company pays premiums based on its own performance, not the industry’s performance. A captive's insured’s are its shareholders that control underwriting policies, price risks, set investment policies and direct the company. 
 
 
Risk Retention and Risk Purchasing Groups (RRGs)
 
These are captives that write only liability coverage.  An RRG with a federal charter can write liability coverage in any state where it is registered without having to become a licensed carrier in each state or use a fronting company. This can reduce the costs of crossing state boundaries. Some states allow reciprocal risk retention groups, which are an unincorporated association of individuals or entities that exchange insurance contracts through an attorney-in-fact, which acts as an agent or manager. In a reciprocal, profits and losses are allocated back to each member. The income and related income tax reverts back to the members. This can be a tax advantage to groups where the members are non-profit companies.
 
 
Rent-A-Captives
 
These are popular with medium-sized companies. Here the policyholder is insured by a captive without owning it. A captive rents its capital, surplus, and license to the policyholder and usually provides administrative services.
 
 
Sponsored Captives
 
These are a type of rent-a-captive that is not created by its insured’s’, who have no control or ownership in the captive. Sponsored captives allow businesses to insure their own risks without establishing their own captive.
 
 
Insurance pools
 
These are joint underwriting operations where the participants assume a predetermined and fixed interest in all business written.
 
 
Association Groups
 
An association captive is owned by members of a common industry or trade. Participation is limited to members of the association.

 
Summary
 

Companies that participate in Alternative Risk Transfers programs, especially captives that own their own insurance company, realize more control by paying only the claims they incurred and not the losses of bad companies.  Profits on invested surplus (the underwriting profit) go to the group’s members or captive owner rather than an insurance company.

 

Author Rebecca Shafer, JD, President of Amaxx Risk Solutions, Inc. is a national expert in the field of workers compensation. She is a writer, speaker, and publisher. Her expertise is working with employers to reduce workers compensation costs, and her clients include airlines, healthcare, printing/publishing, pharmaceuticals, retail, hospitality, and manufacturing. She is the author of the #1 selling book on cost containment, Workers Compensation Management Program: Reduce Costs 20% to 50%. Contact: RShafer@ReduceYourWorkersComp.com.

 

Editor Michael B. Stack, CPA, Director of Operations, Amaxx Risk Solutions, Inc. is an expert in employer communication systems and part of the Amaxx team helping companies reduce their workers compensation costs by 20% to 50%. He is a writer, speaker, and website publisher.  www.reduceyourworkerscomp.com Contact mstack@reduceyourworkerscomp.com

 


WORKERS COMP MANAGEMENT MANUAL:  www.WCManual.com

VIEW SAMPLES PAGES

MODIFIED DUTY CALCULATOR:  www.LowerWC.com/transitional-duty-cost-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.

 

©2012 Amaxx Risk Solutions, Inc. All rights reserved under International Copyright Law. If you would like permission to reprint this material, contact us at: Info@ReduceYourWorkersComp.com.

How The Alternative Market Can Reduce Your Workers Comp Costs

 

What is the Alternative Market?
 
The Alternative Market or Alternative Risk Transfers (ARTs) are insurance programs that typically keep some part of the risk instead of transferring all of the risk as in a “traditional” insurance policy. The Alternative Market has various types of programs like:
 
·             Self-insurance
 
·             Captives
 
·             Risk Retention and Risk Purchasing Groups (RRGs)
 
·             Rent-A-Captives
 
·             Sponsored Captives
 
·             Insurance pools
 
·             Association Groups
 
 
The purpose of all ART programs is to recoup or retain the underwriting profit. Companies that invest in loss control and maintain tight controls on their claims often have lower losses. In the traditional market, the insurance carrier collects a premium and uses it to pay the losses of the good and the bad companies.
 
 
Self-insurance
 
Some employers self-insure through insurance pools. They set aside funds in anticipation of workers' compensation claims instead of buying insurance. This is a cost-saving method for safety-oriented firms. In states where this is allowed, many large employers self-insure. Many small businesses form groups to insure themselves and decrease risks.

 
Captives
This is an insurance company that is controlled by its owners. A captive usually insures businesses that are related to it through common ownership. The company pays premiums based on its own performance, not the industry’s performance. A captive's insured’s are its shareholders that control underwriting policies, price risks, set investment policies and direct the company. 

 

 
 
Risk Retention and Risk Purchasing Groups (RRGs)
 
These are captives that write only liability coverage.  An RRG with a federal charter can write liability coverage in any state where it is registered without having to become a licensed carrier in each state or use a fronting company. This can reduce the costs of crossing state boundaries. Some states allow reciprocal risk retention groups, which are an unincorporated association of individuals or entities that exchange insurance contracts through an attorney-in-fact, which acts as an agent or manager. In a reciprocal, profits and losses are allocated back to each member. The income and related income tax reverts back to the members. This can be a tax advantage to groups where the members are non-profit companies.
 
 
Rent-A-Captives
 
These are popular with medium-sized companies. Here the policyholder is insured by a captive without owning it. A captive rents its capital, surplus, and license to the policyholder and usually provides administrative services.
 
 
Sponsored Captives
 
These are a type of rent-a-captive that is not created by its insureds, who have no control or ownership in the captive. Sponsored captives allow businesses to insure their own risks without establishing their own captive.
 
 
Insurance pools
 
These are joint underwriting operations where the participants assume a predetermined and fixed interest in all business written.
 
 
Association Groups
 
An association captive is owned by members of a common industry or trade. Participation is limited to members of the association.
 
Summary
 

Companies that participate in ART programs, especially captives that own their own insurance company, realize more control by paying only the claims they incurred and not the losses of bad companies.  Profits on invested surplus (the underwriting profit) go to the group’s members or captive owner rather than an insurance company.

 

Author Rebecca Shafer, JD, President of Amaxx Risk Solutions, Inc. is a national expert in the field of workers compensation. She is a writer, speaker, and publisher. Her expertise is working with employers to reduce workers compensation costs, and her clients include airlines, healthcare, printing/publishing, pharmaceuticals, retail, hospitality, and manufacturing. She is the author of the #1 selling book on cost containment, Workers Compensation Management Program: Reduce Costs 20% to 50%. Contact: RShafer@ReduceYourWorkersComp.com.

 

Editor Michael B. Stack, CPA, Director of Operations, Amaxx Risk Solutions, Inc. is an expert in employer communication systems and part of the Amaxx team helping companies reduce their workers compensation costs by 20% to 50%. He is a writer, speaker, and website publisher.  www.reduceyourworkerscomp.com Contact mstack@reduceyourworkerscomp.com

 


WORKERS COMP MANAGEMENT MANUAL:  www.WCManual.com

VIEW SAMPLES PAGES

MODIFIED DUTY CALCULATOR:  www.LowerWC.com/transitional-duty-cost-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.

 

©2012 Amaxx Risk Solutions, Inc. All rights reserved under International Copyright Law. If you would like permission to reprint this material, contact us at: Info@ReduceYourWorkersComp.com.

Self-Employed Contractor Gets Suspended Prison Term in Death of Friend

The Health and Safety Executive reports a self-employed roofing contractor of Essex, Great Britain has been given a suspended prison sentence in the death of a friend. The contractor's friend fell through the room of a residential garage and later died of his injuries.

 
Steve Mason was contracted to replace a flat roof on a double garage at a house in Well Lane, Stock, near Chelmsford, and brought James Waughman with him. While on site,Waughman, 58, of Perry Road, Tiptree, suffered a stroke and multiple injuries after falling to the garage floor through a gap in the rafters. He died three weeks after the incident in July of 2009. (WCxKit)
 
The contractor, Steve Mason, also 58 of Perry Road, Tiptree, received an eight-month prison sentence, suspended for 12 months, and was ordered to pay $820.00 (£500 costs) recently at Chelmsford Crown Court after admitting breaching section 3 (2) of the Health and Safety at Work Act 1974.
 
HSE Inspector Lesley Balkham noted, “This sends out a powerful message to roofing contractors. Steve Mason failed to properly consider the risks of the job and act to limit the chances of injury or even death. He should have put guard-rails around the edge of the roof and taken measures to prevent anyone falling through it, but he chose not to.”
 
No matter what size the business, everyone in the construction industry should be very familiar with the risks of working at height and appreciate the importance of ensuring that the right precautions are put in place, however small the job. Falls from height remain one of the biggest causes of workplace deaths in the UK.”
 
Author Robert Elliott, executive vice president, Amaxx Risk Solutions, Inc. has worked successfully for 20 years with many industries to reduce Workers Compensation costs, including airlines, healthcare, printing/publishing, pharmaceuticals, retail, hospitality and manufacturing. See www.LowerWC.com for more information. Contact: Info@ReduceYourWorkersComp.com.


Our WORKERS COMP BOOK:
www.wcmanual.com

WORK COMP CALCULATOR:  www.LowerWC.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.
 
©2011 Amaxx Risk Solutions, Inc. All rights reserved under International Copyright Law. If you would like permission to reprint this material, contact Info@ReduceYourWorkersComp.com.

Using Cheat Sheets to Learn New State Laws

One of the scariest parts of expanding a business into a new state for the self-insured employer is learning the workers compensation laws and state mandates in the way of forms, filings, hearings, etc. While an employer can hire a third party administrator (TPA) to handle claims, or a law firm to guide you through all the steps of workers comp claims handling, it is in your best interest to learn the basics of the workers comp system in the new state quickly. Or, get a good resource that has such information. Ask your TPA what resources they use. Even though they have professional resources, similar resources can be very helpful for the self-insured company.
 
 
Self-insured employers have two choices: spend weeks/months learning the new workers comp system or, to borrow a video game phrase, get “cheat sheets” to speed up the learning process. (WCxKit)
 
 
Many law firms specializing in insurance defense work sometimes offer “cheat sheets” to new adjusters and potential new clients as a way of building business. Instead of the employer spending “forever” learning the basics of the new state’s workers comp law, the cheat sheets give a synopsis of important information the self-insured employer needs to know.
If you want a jump of learning this information and don't want to rely on free cheat sheets, excellent information – in easy to use tables — is available from www.workcompresearch.com
 
Common cheat sheets/reference tools include:
1.      A list or a table of state forms and when each is to be filed.
2.      Explanations of state forms and rules associated with each form.
3.      Table of temporary total indemnity benefits by calendar or fiscal year.
4.      Table of temporary partial indemnity benefits by calendar or fiscal year.
5.      Table of permanent partial disability benefits.
6.      Table of scheduled injuries.
7.      Charts for combining two or more impairment ratings.
8.      Death benefit tables.
9.      Table on statutes of limitations on filing claim, appealing claims, etc
10. Calculation of indemnity benefit guidelines.
11. Checklist of defenses to claims.
12. Charts or tables on how the judicial system works.
13. Claim settlement guidelines.
14. Guidelines on the selection of medical providers.
15. Guidelines on posting a panel of physicians
16. Forms for:
·        New employees/transferred employees to sign acknowledging the selection of a physician.
·        Injured employees to acknowledge the attending physician requirement(s).
·        Requesting a new physician.
·        Employee to decline medical treatment.
17. Samples of required state notices for posting.
18. Recent changes in the state law.
 
 
In addition to the cheat sheets, get a glossary of workers compensation jargon and terms as used in a particular state. This type of glossary also assists you in understanding the abbreviations often used within the state, for example – DOAH (Florida Division of Administrative Hearings), BRC – Benefits Review Conference, or IW – injured worker. (WCxKit)
 
Summary
A new employer in a state can spend time learning the workers comp system, contact some of the law firms specializing in insurance defense work or consider www.WorkCompResearch.com as eventually learning the system in the new state definitely has it benefits, but quickly learning the basics summarized by experts speeds up the learning curve and assists in understanding the workers comp system.
 
 
Author Rebecca Shafer, JD, President of Amaxx Risks Solutions, Inc. is a national expert in the field of workers compensation. She is a writer, speaker, and website publisher. Her expertise is working with employers to reduce workers compensation costs, and her clients include airlines, healthcare, printing/publishing, pharmaceuticals, retail, hospitality, and manufacturing. See www.LowerWC.com for more information. Contact: RShafer@ReduceYourWorkersComp.com.

 
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.
 
©2011 Amaxx Risk Solutions, Inc. All rights reserved under International Copyright Law. If you would like permission to reprint this material, contact Info@ReduceYourWorkersComp.com.

Bulgarian Home Workers Face Low Pay and Poor Working Conditions

A survey conducted in the last year for the Confederation of Independent Trade Unions in Bulgaria examined the home working sector which employs more than 500,000 people.
 
 
Face-to-face interviews with 500 home workers confirmed the findings of previous surveys and revealed low pay (mainly at piece rate), long hours and poor working conditions. About 80% of the respondents were women and more than half were aged 50–65; 55% were self-employed and the rest worked under contract. (WCxKit)
 
 
The survey aimed to map the employment conditions of home workers and to present a more complete and comprehensive view of the home working sector, which includes more than 500,000 people.
 
 
The survey was undertaken by the Association of Home-based Workers for the Confederation of Independent Trade Unions in Bulgaria (CITUB) as part of a project called ‘Security through the law and flexibility through collective bargaining’ funded by the European Social Fund in Bulgaria (ESF) under its Human Resources Development Operational Programme 2007–2013.
 
 
Home workers in Bulgaria are entirely in the informal economy; their work is invisible and is not monitored. The process of surveying home workers is further aggravated by the difficulties in locating these workers and by their fear of the tax authorities. The interviewers were specifically trained to deal with this problem and the survey used specially developed tools to map the home workers. There were also problems associated with the tendency for survey participants to be embarrassed and unwilling to talk about their problems, relationships, ties, etc.
 
 
The survey consisted of face-to face interviews with 500 home workers from 10 regions and from the capital, Sofia. Towns and municipalities of different sizes were selected by the interviewers. The interviewers had more than eight years of experience of working with the Association of Home-based Workers, as 90% of them were themselves home workers. They acted through the established network of home workers, and through them also made contact with new home workers.
 
 
The criteria for the analysis of data collected by the survey are:
 
1.      gender and age;
2.      type of home working;
3.      method of working;
4.      working conditions;
5.      working hours;
6.      type of income (whether only from home working or from a combination of regular employment and home working).
 
 
Main findings
The conclusions from analysis of the findings of the 2010 survey are very similar to those from previous surveys conducted by the Association of Home-based Workers in 2002–2003 and 2006–2007. The 2002–2003 survey was funded by HomeNet (an international organization for home working) and the 2006–2007 survey was paid for from the association’s own funds.
 
 
All three studies used similar methods and the interviews were conducted at the home/workplace of the participating home worker.
 
 
Over half of interviewed home workers (51.2%) were aged 50–65 years mostly living in small towns. Some (15.8%) were pensioners and most (82.3%) were women (see table). Where unemployment is high and income is low, home employment is a chance to supplement the household income and improve its economic situation.
 
 
Over half (55%) of the respondents were self-employed people who produced and sold items themselves (‘own account’); they have buy the raw materials, provide the machinery, design the product and sell it. ‘Piece-work’ workers (45% of respondents) work under a permanent contractor from companies that supply them with the raw materials and sometimes also provide equipment and purchase the finished goods.
 
 
Previous surveys conducted by the Association of Home-based Workers also found that, both in times of economic development and of crisis, the highest share of home workers are older people aged over 50 years. This group is usually unemployed and considered too old to be employable. In Bulgaria, employers prefer to hire workers aged 30 and under because younger people are willing to work without contract and receive wages in cash.
 
 
Working conditions
The workplaces of home workers do not necessarily comply with the requirements for safe and healthy working conditions. The production process is not controlled, and its effectiveness and safety depends entirely on the ability of the home worker.
 
 
Most of those surveyed (87.5%) worked in a space in their home that is also used by other household members. Only 12.5% of home workers had a specially adapted workplace at their disposal.
 
 
Home workers frequently work under poor conditions, without any organization of production and labor in low productivity. When working at home, 69.8% of the respondents used hazardous materials (paint, chemicals, adhesive, dust and fertilizers). In many cases, members of their household are also in contact with these materials.
 
 
Working time can be from 09.00 to midnight without interruption. The average working time of 160 hours per month relates to those doing extra work at home (for example teachers and accountants) and those who are only employed part time due to the economic crisis. The monthly working time of self-employed home workers can average 200–240 hours overall.
 
 
The pay for a home worker is calculated by what is being produced per hour (piece rate basis). Just over half of these workers (51.2%) not only produce the product, but also sell it themselves.
 
 
Regulation
Home-based employment in Bulgaria is not regulated by law.
 
 
Bulgaria ratified Convention 177 of the International Labor Organization (ILO) on homework in 2009, but still has no legal provisions for its implementation. As a consequence, this economic activity is not reported in Bulgarian statistics and the exact number of home workers is not known.
 
 
Self-employed home workers tend not to comply with the legislation that requires them to register with ID and pay insurance and taxes; they work without benefits and without paying taxes.
 
 
Only 2.8% of respondents in the survey had a work contract.
 
 
Commentary
The problems of home working in Bulgaria are largely known and identified. CITUB and non-governmental organizations (NGOs) have been fighting for more than four years for regulation of home working in the country.
 
 
As a result of this fight, a national agreement was signed at the end of 2010 on the regulation of home-based work in accordance with ILO Convention 177. (WCxKit)
 
 
But the fight continues because this agreement will regulate only the labor of home-based workers and the problem of self-employed home workers remains
 
 
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, healthcare, printing/publishing, pharmaceuticals, retail, hospitality and manufacturing. See www.LowerWC.com for more information. Contact:Info@ReduceYourWorkersComp.com
 
 
 
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.
 
©2011 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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