Pool Rules: Swim at Your Own Risk
It’s the dreaded words that every business owner doesn’t want to hear: “Your only option to secure workers’ compensation coverage is through the assigned risk pool.”
Although the assigned risk pool serves a purpose for clients unable to secure coverage in the standard market, you want to avoid having your workers’ compensation coverage placed through this program. Here are a few tips that can help you avoid being placed in the assigned risk pool and/or help you get out:
- Provide three years of credible loss history: Put together a report on insurance company letterhead showing that you’ve had coverage in place for three consecutive years.
- Manage claims: Many business owners end up having no other alternative workers’ compensation options because they haven’t managed their claims properly. The frequency (number of claims) and severity (total cost of the claim) will be reviewed by a carrier to determine eligibility for their program. The better you manage your claims, the better chance you have of securing coverage through a standard carrier.
- Improve your Experience Modification Factor: This is tied to your claims and can determine whether you qualify for a debit or a credit on your workers’ compensation policy. Generally speaking, the lower your claims (in frequency and severity), the better Experience Modification Factor you’ll have which will make your company more desirable to a standard market.
- Be selective with placements. Carriers will take into consideration what type of placements you’re making; they’ll consider the client, the environment, as well as the employee’s job description. If there are high hazard risks associated with the position, a carrier is less likely to insure that class code. Most carriers have an ineligible class code list that outlines the class codes they consider to be too hazardous to insure and will not offer coverage for.
- Mention growth: Most carriers have minimum premiums associated with workers’ compensation coverage (e.g. $50,000, $100,000 etc. annually). As you continue to increase your payrolls and make more placements, this growth will be more appealing to carriers and provide a better opportunity of having a standard carrier taking on the risk.
Securing workers’ compensation coverage with a standard carrier is ideal* because you’ll most likely get the following benefits: reduction in premium, flexibility with coverage (e.g. endorsements and adding additional states to your policy), efficient claim handling, etc. The ‘pool’ is a swim at your own risk kind of place. You can either put your business in the deep end, or put on those flippers and get to shallow waters.
*Please keep in mind that each standard carrier has their own guidelines when reviewing a risk and determining eligibility for coverage.
- Workers’ Compensation E-Book
- Workers’ Compensation Videos
- Staffing Case Study: Navigating from an Assigned Risk Pool
- Claims Management Webcast
- Know Your Digits: Workers’ Comp Class Codes
- Workers' Compensation E-Book
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