Kentucky’s major workers’ compensation insurance carrier has decided to return some of its surplus to policyholders.
The decision comes after several weeks of political pressure. Earlier this month, Gov. Steve Beshear asked the insurer to consider returning some of its $147 million surplus as a premium reduction or dividend.
Now the board of directors for Kentucky Employers’ Mutual Insurance (KEMI) has approved a total dividend of $30.8 million which it said will affect more than 73,000 employers.
Although KEMI has distributed more than $30 million in rate reductions over the last three years, this marks the first time KEMI has issued a dividend payment to current and former policyholders in its 15-year history.
“This dividend followed an extensive review by independent actuaries who analyzed several factors, including KEMI’s policyholder equity, catastrophic loss exposure, and overall financial performance,” said Roger Fries, president and CEO of KEMI.
Dividend checks will be issued in July of this year to customers who were insured by KEMI between Sept. 1, 1995 and Dec. 31, 2008. Under the approved plan, only policyholders who had a KEMI policy for at least six months and maintained a total loss ratio below 75 percent are eligible to receive a dividend payment. Additionally, KEMI is authorized to recover from any dividend payable those amounts that are currently written off to bad debt or in outstanding collections status and will not issue a dividend of less than $50.
The dividend plan now goes to the Kentucky Department of Insurance for review.
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