Self-Insured Companies Utilize Excess Workers’ Compensation Insurance

excess workers compensationMany companies are finding that it is in their better interest to become self-insured, and they are using excess workers compensation to maintain better control over the amount of money they are spending on insurance. For these companies, being self-insured provides several benefits, including an increase in the flow of cash with a low start-up cost and more efficient management when it comes to employees’ claims.

Coverage categories

Excess workers compensation insurance is available in two coverage categories for companies to select from.

  • Specific – companies that use this type of coverage essentially put a cap on what they will pay for an individual claim. There is generally a liability limit set in this plan and retentions are lower.
  • Aggregate – When a company uses aggregate coverage, it means that they have set a specific amount that it will pay, in total, for workers compensation insurance claims within a year’s time.

How to become self-insured

Companies that wish to be self-insured need to qualify according to their state’s regulatory requirements and they can only do so if the state they reside in allows self-insurance. Companies that gain self-insured status come from a number of industries such as:

  • Retail
  • Healthcare
  • Government (counties/cities/utilities)
  • Service

There are a couple of choices that a company has when they become self-insured. The first option is to simply act as their own insurer, or a stand-alone provider. The second option is to join with other employers in an association program to set up workers compensation coverage. Both have benefits, which can be described by a qualified insurance broker.

Many companies have acted as their own insurers and found it to be a successful choice that gives them more control over their workers’ compensation, and a greater cash flow.