Not all insurance carriers are created equal! Some are good at providing workers compensation insurance coverage and some are not. Yes, you’ll find there’s a broad range of providers out there. Some mono line workers comp carriers really have their stuff together while others, whether multi line (those that sell other insurance products) or mono-line, fall way short. But one thing they all have in common is a list of unacceptable classes of business. Let’s talk about risk selection and unacceptable class codes!
Insurance carriers are no different than many businesses. In order to be consistantly successful, they must have a good understanding of their strengths and weaknesses and a full understanding of the product they sell. They must know what they’re doing!
The workers compensation insurance product, while a simple concept, is made up of many levels and one of those levels is that of risk selection. Keep in mind that from an insurance company perspective it’s about providing a product they can support while making a profit. One of the ways an insurance company can help themselves in the profit category is to have a well defined risk assessment program in place. A program that allows them to identify those classes of business where they make money and those classes of business where the lose money.
There’s a lot that goes into the process of risk selection including proper analysis of class code performance. This would be a statistical evaluation by classification code of claim dollars spent and premium generated. Individual carrier performance along with industry historical performance should be considered. Once armed with this information the insurance company can make decisions regarding the acceptability or unacceptability of certain classification codes.
Here’s a few classes of business that you’ll find on the typical unacceptable list:
- Hazardous Material Handling and Transporting
- Dam Construction
- Coal Mining
- Mining
- Oil and Gas Work
- Logging
- Oil Refining
- Explosives
- Chemical Manufacturing
- Tunneling
- Various Aviation Exposures
- Diving
- Many USL&H Exposures
- Outer Coneinental Shelf Work
- Many Others…
And for many insurance carriers these classes also pose difficulty:
- Various Construction Classes: Bridge Building, Roofing, Framing, Excavation, Concrete and more…
- Transportation Risks
- Iron or Steel Erection
- Demolition
- Sewer Construction
- And many more…
As you see, high hazard classes of business are difficult for almost every carrier. Don’t panick! There are special markets and methods of providing coverage out there for these types of risks. Limited, yes, but available.
So what’s all this mean? Not all insurance companies will provide workers compensation coverage for all class codes!
Hope this helps you out and thanks for visiting our blog!
