How to get out of the Workers Compensation Assigned Risk Pool – Tips An Employer Can Use

It can be difficult for an employer who finds their only option for securing workers compensation coverage is through the Assigned Risk Plan otherwise known as The Pool. Significantly higher premiums, lack of policy credits and premium discounts, application of the ARAP factor and limited services coupled with no choice of insurance company are just a few of the unfortunate consequences an employer in the workers compensation pool faces. Let’s throw a life-preserver and examine a few steps an employer may take to pull themselves out of the pool!  

It’s usually a long swim and there’s no easy way or shortcut that an employer can take to get out of the workers compensation assigned risk plan. It begins with an examination of the conditions that caused them to be placed in the pool in the first place and let’s be honest, it’s almost always directly related to workers compensation claims. I’ve mentioned it many times before in our blog that workers compensation claims happen. It’s the nature of things. Employees sometimes get hurt at work and when they do it’s the workers compensation system that takes care of their injuries and protects the employer from tort litigation. But we’re not here to talk about that just now. 

What can an employer do to get out of the pool? Here’s a few tips to follow:

Conduct an analysis of your situation. It’s important to gain a thorough understanding of how you ended up in the assigned risk plan. 

Ask these questions and consider their impact:

  • Am I in the pool because of a hazardous or high risk process in my operations? – If so you may find the assigned risk is the only available workers compensation option for your business.
  • Am I in the pool because of an out of control experience modification rate or EMR? – If so you must examine the details of your EMR and uncover the driving force of the high factor. Was it calculated correctly? Were correct rating elements used in developing the EMR? Are correct workers compensation codes used on my business? Are there other mistakes that may indicate an incorrect EMR was developed?
  • Am I in the pool because of out of control losses or claims? – This is probably the single biggest reason an employer winds up in the pool. Uncontrolled losses will typically result in having a standard market insurance carrier non-renew a policy. Once that’s done your agent will go through the efforts of trying to place your coverage with another preferred or standard market and when any new carrier is presented with an unprofitable account that exhibits uncontrolled losses it won’t be long before a declination will follow! Unable to secure coverage through the standard market will  result in having to use the market of last resort otherwise known as the assigned risk or pool. 

Claims or losses and potential profitability drive an insurance carriers desire to insure an employers workers compensation exposure. When in the pool the goal is to get out and the place to start is to gain control over losses.  

Here’s a few tips:

  • Analyze Your Claims – You need to know where your claims are coming from and design a response geared to eliminate future claims from occurring. Start by having your loss history reviewed then move on to individual claims.
  • Develop and Implement a Workable Safety Plan – Not just something on paper but put together a safety program that involves your employees and work the plan!
  • Ask For Help – There’s plenty of resources out there to help you set up a safety program. Start with your agent. Ask them for help setting up a program.
  • Return To Work Program – If you don’t know about this then you’ve had your head in the sand for many years! It’s key to get your injured employee back to work as soon as possible and insurance carriers love to see these plans in writing. They also love to see that you are involved in an organized way with any claims that happen at your business.
  • Conduct a Claim Review – Once you have a handle on your current claims look to your past. Have a claim review conducted on your past claims to make sure they were compensable and correctly handled.

Have I mention claims enough? So the first step an employer needs to take to get out of the pool is to get a handle on claims! Become organized. Clean up your act. Make your business attractive to insurance carriers. Put it in writing! 

Remember getting out of the pool will not happened overnight. It will take time but it can be done.

Hope this helps you out and thanks for reading!