High deductible self insured Work Comp

[JAM]

Has anyone heard of WC coverage for larger firms with the first 500k being self insured? How do you access these type of products?

[kcharette]

Are you asking about a deductible policy or an excess policy on top of the SIR?

[JAM]

I should have been more clear. The fist 500k is self insured and the rest is insured by a WC policy. Also, if there are plans with deductibles I would like to hear about those as well. What companies offer these plans?

[kcharette]

I think Safety National is a big player for excess comp statutory limits. I thought most big companies had large deductible products - Chartis, CNA, Liberty, Travelers, Zurich, etc.

[waltmarkers]

With high deductible comp or excess comp with a large SIR, claims administration becomes a big part of the equation. Generally, those that have a large deductible or SIR have a good claims flow every year. The excess workers comp with large SIR is a pure financial risk transfer. It usually does not include claims administration.

The broker or insured has to retain the services of a TPA to administer the claims and work the subro issues.

If you've never done it before, take a good look at the current program, and you may want to talk to a broker who has. You really have to dig into the TPA pricing and services. Since that's where all the loss mitigation happens in the account, for most insureds, the TPA services lead.

Mark Walters, ARM, CPCU
CS Insurance Strategies
http://insuresavvy.blogspot.com

[JAM]

Can you recommend a good TPA?

[waltmarkers]

Well, good TPA can mean a lot of different things. I recommend you go in with specific goals.

If most of the exposure is in a state where you can have panel physicians, then getting the best medical network as part of the TPA is very important. The medical bill repricing benefits will be huge. Certain setups I've seen the local Blue Cross charge in the six figures for access to their network rates, and this save the client millions. Smaller accounts,the TPA provides access to their network and reprices medical bills as part of the claims service. (They usually charge a portion of the discount, or bundle with the rest of their service.)

In my state, IL, the employer isn't able to direct treatment to a panel, so there is less opportunity to maximize savings with a network.

Other important services is the 24 hour double point of contact (injured worker & employer) with a doctor contact shortly thereafter. Nurse case management, pre-arranged legal representation (and fees), strong subrogation, flexibility in reporting and broker / insured RIMS data access, and case load per adjuster.

Some TPAs are local and regional, but the ones I've dealt with and really liked are PMA, Sedgwick, and Gallagher Bassett. YMMV.


Mark Walters, CPCU
CS Insurance Strategies
http://insuresavvy.blogspot.com

[wcclaimsguy]

If you have not been in a risk sensitive program, you are probably better off starting with a large deductible program. This gives you the benefit of a risk sensitive program, without the regulatory issues of self insurance. If you have good results with the large deductible, then you can transition into self-insurance to achieve even greater savings.

The big thing with any risk sensitive program is that you must have a commitment to loss prevention and loss control. Every claims dollar is literally coming out of your pocket (up to your retention), so the success of your program is entirely dependent on your commitment to it.

Your choice of a TPA is a very important one. They are your partners in making this a success. You need to choose someone you are comfortable with. Don't price on cost alone. Find out exactly what you are getting from your TPA services, and what costs extra. Sometimes a lower per-claim charge has larger back end charges.

As someone else mentioned, you need to hook up with a broker who has experience in setting up risk sensitive programs. They will be a great asset as you consider the different options that are available to you

Here is a link to my company's web site, which provides some additional information on the benefits of risk sensitive programs.
http://www.safetynational.com/company.html

[RMS Underwriter]

Keep in mind that one of the major differences between high sir and high deductible is in who has the final sayso in the claims settlement process. Large deductibles are recognized by insurance carriers and insurance departments alike as "fully insured" programs even though the insured pays the ultimate deductible cost. This carries with it the responsibility by the insurance carrier to handle claims within the confines of approved industry standards and policies and in such a manner as to avoid any impropriety or appearance of bad faith. Also imbedded in the deductible product is the fact that the final decision to settle and at what cost rests ultimately with the carrier so you need to be comfortable in your relationship with the selected carrier's claims handling personnel and settlement styles. A high sir gives the final decision-making responsibility for claims settlement within the sir to the insured, along with all of the bad faith connotations for a poorly handled claim.

[kcharette]

There could be some significant premium tax savings going with a self insured program depending on the state.

[doyourhomework]

I haven't seen anyone address the fact that you must carry on your balance sheet the liabilities incurred for claims within the self insured layer. The premium savings can be substantial but LOC's and carrying those liabilities can impact your credit rating as well as other issues making business financing more difficult, especially these days. The lower premiums can also reduce your tax writeoff for insurance premiums. You will also have to be bonded so explore those costs as well.

When choosing self insurance you MUST balance the positives and negatives prior to committing as doing it later could cost you your business.