Underwriting – Alternative Workers’ Compensation Insurance Products
Lovell Safety Management has several alternative workers’ compensation insurance products for large, financially secure New York employers. These alternative workers’ compensation plans provide employers with the ability to realize savings based on their loss performance. These plans include large deductible plans and return of premium plans.
Large/High Deductible Plan
Lovell can provide custom tailored large deductible plans for financially secure New York employers with standard premium more than $1 million. These plans provide employers with the benefits of self-insurance without the regulatory compliance, headaches, and costs. The main difference is that a large deductible is a fully-insured program where the carrier has first dollar liability, and the employer reimburses the carrier for losses up to the deductible limit.
How Does a Large Deductible Work?
Large employers select a deductible level, usually $250,000 or higher and are responsible for the payment of all claims up to that dollar limit. Because payments are made as they are incurred, employers can realize significant cash flow savings through a large deductible. The carrier is responsible for all costs on a claim/occurrence basis for all dollars above the deductible level.
The employer must provide: an evergreen letter of credit for a portion of the anticipated claims; premium for the potential excess losses and administrative costs; and pay all losses up to the deductible. A loss fund is not required, as the employer reimburses the carrier for losses as they go on a monthly basis. In addition, the employer can select and purchase an aggregate stop loss limit to limit total liability.
Most importantly, the employer can have the carrier or opt for a 3rd party to administer their claims. The option for a 3rd party to administer their claims is available as the employer is responsible for all payments up to the deductible limit.
Return of Premium (ROP) Plan
For New York employers who want a loss sensitive plan but are not willing to take on the potential transfer of loss that comes with a deductible plan, Lovell can offer a Return of Premium Plan.
This plan is a guaranteed cost, fully insured policy that retrospectively makes a one-time adjustment based on the loss performance of the employer. It simply allows the employer that has a good loss year to see additional savings through a return of premium.
How Does a ROP Plan Work?
Large employers on an ROP plan are provided a guaranteed cost plan that usually has a slightly higher upfront cost with an endorsement that enables the return of premium at a timeframe, “X” months after the end of the policy period if their losses fall within the set loss ratio thresholds.
At the set time period, the carrier takes a snapshot of the losses, applies a predetermined development factor as outlined in the endorsement and if the employer’s losses fall within the set loss ratio ranges, the carrier returns the predetermined percentage of premium.
This plan provides a low, risk-free methodology for employers to realize additional savings when they have a low loss year.
An employer who partners with Lovell to ensure their program is well run has the potential to see additional savings.
We’re Here to Help
Lovell’s team of experts are ready to assist you in placing coverage for that large workers’ compensation account who demands more for less. Our nearly 90 years of specialized workers’ compensation insurance experience make us uniquely qualified to service these accounts. Speak with a sales representative today!
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