Many large companies look for alternative Workers’ Compensations solutions, including self-insurance, Large-Deductible programs, and Retrospective Rating plans, to take greater control over costs while providing the benefits needed to meet their obligation to provide indemnification for on-the-job injuries, illnesses and accidents.
Insurance wholesaler Associated Insurance Specialty Agency (ASIA) has access to Workers’ Comp markets that specialize in working with large accounts. Among the solutions we can provide are:
Guaranteed Cost Plans: Under this traditional plan, the billed premium is determined at the beginning of the policy period and is not subject to adjustment as a result of loss experience. The policy is manually rated, adjusted by a loss cost multiplier (if applicable) and an experience modification. The adjusted rate is then multiplied by payroll. The only adjustment to the original billed premium is at expiration. A final audit of the actual payroll versus the original estimated amount is completed at that time.
Large-Deductible Plans: A form of self-insurance, this is ideal for accounts paying $500,000 or more in Workers’ Comp premiums. This plan allows for large insureds to self-insure their Workers’ Compensation risks without having to satisfy burdensome filing requirements for self-insurance. An insured is responsible for the first portion of any loss, with the insurer providing excess coverage over the deductible amount and possibly for all losses above a certain aggregate. The insured funds an account (loss fund) to pay losses and the insured reimburses the fund as losses are paid. The insured must collateralize, usually by letter of credit, an amount approximately equal to the difference between paid and ultimate losses.
Retrospective Rating Plans: The ultimate premium under this plan is determined after the policy expires, or retrospectively, and is ideal for accounts paying between $150,000-$500,000 in premium. The final premium is determined based on the actual losses of the policyholder, and under these plans, collateral or a letter of credit for future losses is typically not required. These plans are for accounts with an active role in controlling losses, as the premium ultimately charged in a Retro plan can be significantly lower than a Guaranteed Cost alternative. The ability to predict losses accurately and reasonably is an important consideration in determining what factors work best for your client’s exposures and experience. All of the factors — basic, minimum, maximum and loss conversion factor — can be varied to match any insured’s particular situation.