Assigned Risk Workers Compensation Policy – The Pool – The who, what and why

The assigned risk plan, commonly known as the workers compensation pool, is considered for some employers the market of last resort. Meaning, for some reason, they cannot secure workers compensation insurance from a standard market company. What does this mean for an employer and how does an employer secure assigned risk coverage? That’s what we’ll discuss in this blog.

Assigned risk plan’s are developed by each individual state to assure all employers operating  within a state can secure workers compensation insurance. Some states administer their own plans while others contract nationally with NCCI. Visit our state rules directory for assigned risk contact information for your specific state.

Here’s a list of those states not administered by NCCI:

Non NCCI Assigned Risk States and Administrating Organizations
California WCIP    
Colorado Pinnacol Assurance    
Delaware Delaware Compensation Rating Bureau    
Florida FWCJUA    
Hawaii Hawaii Employers Mutual    
Indiana Indiana Compensation Rating Bureau    
Kentucky KEMIA    
Louisiana LWCC    
Maine MEMIC    
Maryland Injured Workers Insurance Fund    
Massachusetts WCIRBM    
Michigan MWCPF    
Minnesota MWCIA    
Mississippi MWCP    
Missouri Travelers Commercial Casualty    
Montana Montana State Fund    
Nebraska Travelers Indemnity Company    
New Jersey NJCRIB    
New York The State Insurance Fund    
North Carolina NCRB    
Oklahoma CompSource Oklahoma    
Pennsylvania State Workers Insurance Fund    
Rhode Island The Beacon Mutual Ins Co.    
Tennessee TWCIP    
Texas Texas Mutual    
Utah Workers Compensation Fund of Utah    
Wisconsin WCRB    
 All other Non-Monopolistic States NCCI Holdings, Inc.     

 As you can see because of the state specific issue surrounding this topic there’s a hodge podge of individual organizations administering various state assigned risk plans. 

How does having workers compensation coverage provided by one of these plans effect an employer? 

  • Higher rates translate to higher cost. As the market of last resort you can expect the rates by individual classification code will be much higher than those found with a standard market company.
  • Less flexability in premium payment plan options. These plans usually have restricted payment plans, if any, and require larger down payments. 
  • Additional rating factors applied. Those employers with disadvantaged or high experience modification rates or EMR’s are likely to be further burdened by the application of an ARAP, Assigned Risk Adjustment Program, factor. This factor is controlled by individual states. It’s purpose is to place more responsibility on those employers in assigned risk who do not control their workplace claims. The average ARAP factor is 49%! This is applied on top of an employers EMR. 

Who usually ends up in one of these plans?

  • Employers with poor claim history. Those who are unable to find a standard company to place their workers comp insurance.
  • Employers who operate in high risk industries.Most standard market companies have a limited appetite for taking on operations who perform high risk work such as:
    • Blasting Exposure
    • Hazardous Material Handling & Transportation
    • Mining
    • Asbestos Abatement
    • Oil Refining
    • Scaffolding
    • Logging
    • Bridge Building
    • Atomic Energy Work
    • Tower Building
    • Dam Construction
  • Employers who are new in business.
  • And of course there are more reasons

How does an employer secure workers comp coverage through these programs?

  • The first place an employer should turn for coverage in assigned risk is to their existing workers comp agent.
  • They can also directly contact the Assigned Risk Administer (look at the list above) for their state. They will provide guidance as far as making application for coverage.

What are the typical requirements to qualify for one of these plans? Believe it or not, even though it’s the market of last resort, not everyone can qualify for entry. Here’s some of the typical requirements:

  • The insured must be declined by two standard market insurance carriers;
  • They must have no outstanding premium owed to a workers comp insurance company;

In conclusion, these plans provide a valuable product, fill a need and have a definite place in the world of workers comp insurance. But for most employers a trip into the workers comp pool is not a pleasant one. These plans are extremely costly and they truely deserve the nick name “market of last resort!”

Keep in mind these plans are very specific to each individual state in question. Not all rules apply to all states. As a matter of fact, they can be quite different so for answers to questions you may have about Assigned Risk Plans give us a call or drop us an email.

Hope this information has been helpful! Thanks!