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Workers Compensation Assigned Risk Plans
Assigned Risk Plans Are the Market of Last Resort
What Is an Assigned Risk Plan?
- Why Workers Comp May Be Hard to Get
- Who Administers the Plan?
How Can You Get Coverage?
Pros and cons of assigned risk plans.
Suppose you try to purchase a workers compensation policy in the standard market but no insurer will sell you a policy. This will create a dilemma since most states require employers to purchase workers compensation insurance. Fortunately, you'll have an alternative: You can secure coverage from your state's assigned risk plan .
Assigned risk plans are established by the states as a safety net for employers that are unable to obtain workers compensation coverage from "regular" insurers. They are the market of last resort for employers that would otherwise have no source of coverage. All states except monopolistic states have established a plan. The law in each state determines how the plan is administered and financed. Assigned risk plans are also called the residual market.
The monopolistic states don't need assigned risk plans because all employers in those states are required to secure workers comp insurance from a government-operated fund.
States have created assigned risk plans so that all employers can obtain workers compensation insurance. The ultimate goal is to ensure that employees who are injured on the job will receive the benefits entitled to them by law.
Why Might Workers Comp Coverage be Hard to Obtain?
Here are some reasons why an employer may have difficulty obtaining workers compensation insurance from a standard insurer:
- Poor loss history : If a business has sustained many small losses or a few large ones, underwriters may assume its management doesn't care about safety.
- New business : A new company is difficult for an underwriter to assess because it has no track record.
- Very small business : A very small company may not generate enough premium to compensate for the risk of claims.
- Hazardous occupation : Many insurers are unwilling to provide workers compensation coverage to employers in risky occupations like logging, trucking, and roofing.
Who Administers the Assigned Risk Plan?
All states have designated an administrator that operates the plan and oversees the issuance of policies. In most states, the administrator is one of the following:
- The National Council on Compensation Insurance (NCCI)
- The state competitive insurance fund
- The state rating organization or another third party
The NCCI administers plans on behalf of 22 jurisdictions. Each of these states requires all workers compensation insurers that operate within its borders to participate in the assigned risk plan. Insurers may either join a multi-state reinsurance pool or serve as a "direct assignment" carrier. When an insurer participates in a pooling arrangement, it may act as a servicing carrier (issuing policies and paying claims) or provide reinsurance to servicing carriers. If an insurer chooses the direct assignment option, it must agree to accept and retain all risks assigned by the NCCI. The direct assignment insurer pays all losses incurred by the assigned employers and is not reimbursed by reinsurance.
In 14 states, the assigned risk plan is administered by the state competitive fund. Examples are California, New York, and Montana. Most of the remaining states have designated their rating organization or an insurer as their plan administrator.
If you or your insurance agent is unable to secure workers compensation coverage for your business in the standard market, you or your agent may submit an application to your state's assigned risk plan administrator. The application procedure varies by state. If the plan in your state is administered by the NCCI, you can apply online 24 hours a day or mail your application to the NCCI via the U.S. Postal Service.
If the plan in your state is administered by a state fund or rating organization, check the administrator's website for application instructions.
To obtain coverage in the residual market, you must have applied for coverage and been rejected by one or more insurers. The number of required rejections varies by state. For instance, employers in West Virginia can apply for coverage in the assigned risk plan only if they provide evidence of rejection by two insurers.
The primary advantage of an assigned risk plan is that it provides coverage to employers that can't obtain insurance in the standard market. One major disadvantage is cost. Employers insured in the residual market generally pay higher rates than those insured in the voluntary market. Those whose experience modifier is greater than 1.0 may also be subject to a surcharge. In addition, some states have eliminated the premium discount on assigned risk policies. An example is Massachusetts. A premium discount is a credit applied when the premium exceeds a certain threshold.
Another drawback of assigned risk plans is that employers can't choose their insurer. Their policy is issued and managed by the plan administrator or servicing carrier. A third disadvantage is limited coverage. Policies issued in the residual market may not be as broad as those purchased from standard insurers. For instance, many policies afford no coverage for operations the employer undertakes in states other than the one where the policy was issued.
- Assigned risk plans serve employers that can't find workers comp coverage in the standard market.
- Most plans are administered by the NCCI, a state insurance fund, or a state rating agency.
- Policies purchased from an assigned risk plan are generally more expensive and provide less coverage than policies obtained in the standard market.
IRMI. " Assigned Risk Plans ." Accessed July 30, 2020.
IRMI. " Workers Compensation Residual Market ." Accessed July 29, 2020.
NCCI. " Insuring the Uninsurable. Workers Compensation Residual Market ." Accessed July 29, 2020.
NCCI. " Options for Submitting Assigned Risk Applications Online ." Accessed July 29, 2020.
State of West Virginia, Offices of the Insurance Commissioner. " Workers’ Compensation Assigned Risk Plan ," Page 2. Accessed July 29, 2020.
NCCI. " Assigned Risk Adjustment Program ." Accessed July 30, 2020.
The Workers Compensation Rating and Inspection Bureau of Massachusetts. " Premium Discount ." Accessed July 31, 2020.
NCCI. " Producers' Guide to Understanding NCCI's Residual Market Limited Other States Insurance Endorsement ." Accessed July 30, 2020.
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Florida Workers' Comp
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Is Workers' Comp Required in Florida?
Florida workers' compensation requirements.
Non-construction companies with four or more full or part-time employees are required to buy workers' compensation insurance in Florida. All construction related businesses are required to purchase coverage regardless of the number of employees unless the entity is permitted to file an owner exemption.
Construction related companies are almost always required to have coverage. Sole-proprietors and partners are not allowed to be exempt from workers' comp insurance. A corporation or an LLC may exempt up to 3 Officers if each Officer owns a minimum of 10% stock.
Sole-Proprietors and Partners (non-construction) are not required to cover themselves on workers' compensation and are automatically excluded. They can elect to be covered by filing form DWC-251. A Notice of Election Form WC1415 form must be filed with he state and insurance company.
Corporate Officers (non-construction) can be exempt from coverage if they own stock and hold office on the Board of Directors.
LLC Members (non-construction) are treated as employees automatically, but they may elect to be exempt from coverage.
Workers' Comp Exemptions in Florida
Sole-Proprietors and Partners included in coverage are required to utilize a minimum payroll of $57,100.
Executive Officers who are included in coverage must use a minimum payroll of $57,200 and a maximum payroll of $171,600 for premium rating. Officers in the construction industry must use a minimum of $23,400.
LLC Members minimum payroll requirement is determined by how the LLC is established for tax purposes: sole-proprietor, partnership, or corporation. Contractors will all be treated as a corporation.
Florida Workers' Compensation Verification
The state of Florida provides a free online tool for verifying workers' compensation insurance coverage. Anyone can search by business name or FEIN. The results will only show the business name and policy number for employers who have coverage in the state being searched. The information is managed by the Florida Division of Workers' Compensation.
Florida workers' comp verification
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How is Workers' Comp Calculated?
Workers' compensation is a commercial insurance product categorized as Property & Casualty insurance (P&C Insurance). Even though workers' comp is calculated using estimated payroll wages and class codes, premium is still a separate business expense from the cost of payroll. Florida Employers may treat the cost of coverage as an expense on their taxes.
Work comp rates for all job classification codes are always expressed as a percentage of $100 in wages. An annual policy is always subject to an audit because it was based on estimated wages and not actual wages.
Here is an example using two class codes with different estimated payroll for each class code:
In order to calculate the cost of the policy you only need to multiply each rate with its divided payroll. It benefits employers to re-calculate their premium as their payroll becomes larger than originally anticipated.
* Additional premium costs may also include an expenses constant, terrorism charges, catastrophe charges and other state surcharges such as a second injury fund or other state assessment fees.
Florida Workers' Compensation Insurance
Every state has their own laws to determine how employees must be covered and how they must be classified for rating premium. A lot of states use state specific class codes and have different requirements for who is obligated to carry workers' compensation insurance.
If you have employees that travel out of state for work, or they work in multiple states throughout the year, you may need to buy a policy for each of the states where your employees are located and working. In most cases, you can cover multiple states on one policy.
Workers' Compensation Insurance in Florida can be purchased from private insurance companies authorized by the state to provide coverage. The Assigned Risk Pool, or an alternate State Insurance Fund , is available for businesses that are unable to find coverage from a private company. Our specialists help will help you navigate your best options.
Policy premium is based on numerous factors including: class codes assigned to your business and employees, estimated payroll, covered states, prior policies, owner experience and previous workers compensation claims.
See Florida workers' comp insurance laws
What Does Florida Workers' Comp Cover?
Florida workers' compensation insurance helps pay claim expenses when an employee, or a covered sub-contractor, is injured while working for your business. It also shields your business from other legal liabilities associated with an injured employee. Work comp coverage includes:
Workers' comp insurance pays for the medical expenses associated with claims or injured workers. The cost of an ER visit, required surgeries and drug prescriptions are some of the covered expenses included under a policy. An employee injured due to a slip and fall would be covered, for example. Coverage for medical benefits can also include longer term expenses such as physical therapy or rehabilitation.
Employee Wages- Income Benefits
Most business owners can't afford to continue paying employees if they are unable to work while they are injured. Workers' comp income benefits in Florida will replace most of your employees missing income if they are away from work due to an injury or illness. For example, if a construction employee broke his arm and could not perform the job for 8 weeks, the coverage would make payments to the employee to help replace the lost wages.
Short-Term and Long-Term Disabilities
Sometimes an injury can cause a partial disability or a more permanent disability. Workers' compensation steps in to help pay the cost of ongoing medical bills and may even replace a portion of wages lost due to the disability. If an employee had a finger amputated due to a work related injury. The employee could be paid a sum (known as an Impairment Rating ) for the loss of the finger for permanent disability as well as some temporary disability coverage while recuperating.
Some types of work environments can include occupational exposures that have unforeseen circumstances. A chemical mixing operation, for example, may expose employees to chemical irritants and cause harmful reactions that make them sick. A workers' comp policy would cover the cost of treating an illness caused while performing the job.
Nearly 50,000 deaths happen at work each year. Many of these are in the construction and trucking industries. A workers' compensation policy is designed to cover the cost of these funerals and to provide death benefits to the employees family. State guidelines often determine the dollar amount of coverage.
Workers' compensation coverage is a No-Fault system designed to prevent costly employee lawsuits related to on-the-job-injuries. Many state provisions include Exclusive Remedy rules that protect covered businesses from these lawsuits in exchange for providing workers' comp coverage for their employees. Claims should be reported to a supervisor with 30 days. Employers should also report any claims or accidents to their insurance company within 30 days from notification.
How Does Workers' Comp Work?
Workers' comp coverage protects employees when injured. It makes good financial sense for both parties.
- Lost income for workers who can't perform job duties
- Medical expenses for injury or illness on the job
- Retraining expenses for employees unable to return
- Permanent injury or disability for lasting injuries
- Survivor benefits if employees are killed on the job
Coverage does not protect employers from everything. Sometimes employees and employers can be negligent .
- Injuries resulting from a violation of the law
- Accidents resulting from using drugs or alcohol
- Injuries that did not occur in connection with the job
- Clear company policy violations
Enjoy the benefits of our Pay As You Go Workers' Comp Options in Florida.
We've developed Pay As You Go workers' compensation programs that reduce or eliminate premium deposits and allow Florida employers to report and pay premium based on actual payroll wages. Protect your business from audits.
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We've negotiated special deals with many of our insurance partners. We offer more flexible payment options, like 12 equal installments plans and monthly reporting programs, to help improve cash flow for our business owners.
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State regulations regarding owners and officers' ability to include or exclude themselves from coverage can be cumbersome. Rules vary significantly between non-contractor and construction related risks. We'll help you navigate the laws and get the most affordable policy.
Help with FL Class Codes
Insurance rates can vary significantly between NCCI classification codes. Let our FL Workers' Compensation Specialists help you determine your correct workers' compensation class codes before your buy a policy. We'll help make sure your business is properly covered.
Fast Workers' Comp Quotes
We make the process of getting workers' compensation quotes fast and easy. We know your time is valuable. That's why we work harder to streamline the quote process, compare your rates and coverages, and present your best options as quickly as possible. We often have your insurance quotes ready in less than 24 hours.
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We're a National Agency, and we have tons of carriers offering work comp in Florida. We have access to over 35 insurance companies with a diverse appetite and competitive rates. Our markets know we expect the lowest rates, bigger discounts, and more policy credits when we request a quote.
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Florida regulators approve 15.1% decrease in comp rates
Businesses in Florida will pay an average of 15.1% less in workers compensation insurance rates starting Jan. 1, 2024, Florida Insurance Commissioner Michael Yaworsky announced on Monday.
Based on a rate filing by the National Council on Compensation Insurance, this is the seventh consecutive year of reduced rates for businesses, according to a statement issued by Mr. Yaworsky.
According to written testimony by NCCI officials, much of the decrease — 13.6% — is the result of loss experience, trends and benefits paid to injured workers in 2020 and 2021.
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Florida Workers Compensation Laws
Workers compensation laws, rules and policy information for the state of florida.
- District of Columbia
- New Hampshire
- North Carolina
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Related Pages: More About Florida Rules
Updated: Rating Payroll 08-10-2023
Authority/State Rating Bureau: NCCI
National Council on Compensation Insurance (NCCI) 901 Peninsula Corporate Circle Boca Raton, FL 33487-1362 800-622-4123
Private Insurance: Allowed
State Fund: No State Fund.
Assigned Risk: Assigned risk coverage in Florida provided by the Florida Workers’ Compensation Joint Underwriting Association (FWCJUA.) The FWCJUA was created during the 1993 legislative session to provide workers’ compensation insurance in the State of Florida to Employers who are required by law to maintain such insurance and who are in good faith entitled to, but who are unable to, purchase such insurance through the voluntary market.
In order to obtain workers’ compensation insurance with the FWCJUA, Employers are required to utilize the professional services of a licensed insurance producer that has been authorized to submit applications to the FWCJUA. The FWCJUA has over 800 authorized Agencies with over 1,400 authorized Designated Producers located throughout the state of Florida. No additional cost will be incurred by utilizing the services of an authorized Designated Producer. Contact FWCJUA at: http://www.fwcjua.com/
Numerical Exceptions: If you are in an industry, other than construction, and have four (4) or more employees, full-time or part-time, you are required to carry workers’ compensation coverage (an exempted corporate officer does not count as an employee).
If you are in the construction industry, and have one (1) or more employees (including yourself), you are required to carry workers’ compensation coverage (an exempted corporate officer or member of a limited liability company does not count as an employee).
If you are a state or local government, you are required to carry workers’ compensation coverage.
If you are a farmer, and have more than five (5) regular employees and/or twelve (12) or more other workers for seasonal agricultural labor lasting thirty (30) days or more, you are required to carry workers’ compensation coverage.
Individual Waivers Allowed: Yes. However corporate officers may elect to be exempt. In the construction industry, no more than three corporate officers may be exempt, and each must demonstrate at least 10% ownership. See below.
Small Deductible Program: Allowed: Yes – See Note Below – But subject to insurance carriers credit investigation and determination of employers ability to repay the deductible. Deductible Range: $500; $1,000; $1,500; $2,000 and $2,500 See Note Below Type: Unknown Effect on Experience Rating: Net – But must be reported Available In: Unknown
Special Note: Florida Statute 440.20(1)(b) Requires that a notice be sent to employers that a state authorized $2,500 deductible plan is available. There is no premium credit for use of this plan. This plan cannot be used on the same policy in conjunction with coinsurance programs or other available deductible plans. For More Information About How Deductible Programs Work
Sole Proprietor: Sole proprietors and partners are automatically excluded from workers’ comp; they do not have to get an exemption. If they wish to be covered by workers’ compensation, they must file form DWC 251 – Election of Coverage with the Division of Workers’ Compensation. If they want to go back to being excluded from workers’ comp, they can file form DWC 251R – Revocation of Election of Coverage. EXCEPTION: See below for important contractors exception. If included the rating payroll used is $40,700 per year 1-1-2011, $41,800 as of 1-1-2013, $42,400 as of 1-1-2014, $43,000 as of 1-1-2015, $43,800 as of 12-1-2016, $46,100 as of 1-1-2018 however if the IRS Schedule C is less that this amount then the amount reported on schedule C may be used. $47,700 as of 1-1-2019 however if the IRS Schedule C is less that this amount then the amount reported on schedule C may be used. $48,800 as of 1-1-2020 however if the IRS Schedule C is less that this amount then the amount reported on schedule C may be used. $50,500 as of 1-1-2021 however if the IRS Schedule C is less that this amount then the amount reported on schedule C may be used. $52,600 as of 1-1-2022. $57,100 as of 1-1-2023.
Partners: Refer to sole proprietor section and contractors section. If included the rating payroll used is $40,700 per year 1-1-2011, $41,800 as of 1-1-2013, $42,400 as of 1-1-2014, $43,000 as of 1-1-2015, $43,800 as of 12-1-2016, $46,100 as of 1-1-2018 however if the IRS Schedule C is less that this amount then the amount reported on schedule C may be used. $47,700 as of 1-1-2019 however if the IRS Schedule C is less that this amount then the amount reported on schedule C may be used. $48,800 as of 1-1-2020 however if the IRS Schedule C is less that this amount then the amount reported on schedule C may be used. $50,500 as of 1-1-2021 however if the IRS Schedule C is less that this amount then the amount reported on schedule C may be used. $52,600 as of 1-1-2022. $57,100 as of 1-1-2023.
Corporate Officers: Officers of a corporation, with ownership in the corporation and who hold an office on its Board of Directors and in non-construction businesses can exempt all of their officers – no limit to number of exemptions. If included the minimum weekly rating payroll used is $400 ($200 for the construction industry) and the maximum is $2,300 as of 1-1-2011, $800 ($400 for the construction industry)/$2,400 as of 1-1-2013, $800 ($400 for the construction industry)/$2,400 as of 1-1-2014, $850 ($400 for the construction industry)/$2,500 as of 1-1-2015, $850 ($400 for the construction industry)/$2,500 as of 12-1-2016, $900 ($450 for the construction industry)/$2,700 as of 1-1-2018. $900 ($450 for the construction industry)/$2,800 as of 1-1-2019. $950 ($450 for the construction industry)/$2,800 as of 1-1-2020. $950 ($500 for the construction industry)/$2,900 as of 1-1-2021. $1,000 ($500 for the construction industry)/$3,000 as of 1-1-2022. $1,100 ($550 for the construction industry)/$3,300 as of 1-1-2023.
LLC Members: Effective July 1, 2013, Section 440.02(9), Florida Statutes were amended to include Limited Liability Company (LLC) members as employees. LLC members will be included on their Workers Compensation insurance policy; however, they may elect to be exempt by filing a Notice of Election to Be Exempt with the Division of Workers’ Compensation. As found in NCCI: For purposes of premium determination, members of non-construction industry limited liability companies (LLC) will be treated in the same manner as the LLC is classified under federal tax laws. For federal tax purposes, an LLC business entity may be classified as a corporation, partnership, or sole proprietorship. And for purposes of premium determination, members of construction industry limited liability companies must be treated as executive officers. However be sure to check with your Florida state authority as to the proper treatment of LLC members.
Use this link to access: Florida State Exclusion and Inclusion Forms – Florida requires notice of election to be exempt forms be filed with the State. This link will take you to a page on the Florida State website where you can find the actual forms and have access for online filing.
Special Notes: None
Experience Rating Eligibility: Employers in Florida will receive an experience modification rate or EMR when they meet one of these triggers:
- $10,000 in policy premium is generated during the last year or last two years.
- $5,000 is the average policy premium generated for more than two years.
Florida Subrogation: Subrogation for Florida workers compensation is addressed in the Florida State Statute 440.39. This statute is available to view online. Use this link to access Florida 440.39, it will take you directly to the statute. If this link does not work then use the access further below and go to the Florida State Statutes and search for 440.39.
Florida Subrogation Statute
Florida Workers While In Other States; Other States Workers While In Florida, Extraterritorial, Reciprocity and Non-Compliance: When an Florida worker is working temporarily in another state, workers compensation coverage for that worker is governed by the extraterritorial provisions found in Florida statutes. When allowed, extraterritorial provisions allow benefits for an injured worker to apply as if the worker was in their primary state. Not all states provide Extraterritorial Provisions. Reciprocity governs coverage for a worker from another state who is working temporarily in Florida. Florida will honor coverage for temporary workers not in the construction industry. Construction industry work requires specific coverage from Florida. And special rules may apply during catastrophic situations where workers from other states come into Florida to help with repairs and cleanup. Compliance of workers compensation laws varies from state to state and it is important for an employer with workers performing duties in other states to be aware of the specific state rules that govern their coverage. We’ve provided the below general information about extraterritorial and reciprocity as a basic guide. Please contact your state authority with your specific questions concerning this topic!
- Provisions: Yes
- Duration: Not Specific
- Allowed: Contact the Florida Division of Workers Compensation for details at http://www.fldfs.com/WC/index.htm
- Specific Statute: Statute 440.094 ;
- For More Information Contact: Florida Division of Workers Compensation, Bureau of Compliance 850-413-1600.
Florida Department of Financial Services 200 E. Gaines Street Tallahassee, FL 32399 800-342-2762
Florida Division of Workers’ Compensation 2012 Capitol Circle SE Hartman Building Tallahassee, Florida 32399-0680 850-921-6966 http://www.fldfs.com/WC/index.htm
Workers Compensation Statute:
2015 Florida Workers Compensation Statute
Didn’t find what you’re looking for? Use the site search or just drop us an email to find out more about Florida laws and rules or our website, blog and services. ________________________________
Information on this page is provided only as a reference. While we strive to mantain accurate information on this site please realize workers compensation laws are complicated and subject to change at any time. No warranty as to the accuracy or completeness of this information is provided or to be implied. You must verify this data before use with the individual governing authority for this state. If you need help with a workers compensation problem or have a specific situation or question please contact our office. Otherwise please consult your states governing authority or an attorney in your state of residency for assistance.
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Legal Requirements for Florida Workers Comp
In Florida, you need a workers’ compensation insurance policy as a business if:
- Your business is in an industry other than construction and it has four (4) or more employees, full-time or part-time (Corporate officers that have correctly filed exemptions with the state do not count as employees).
- Your business is in the construction industry and you have one (1) or more employees (Corporate officers that have correctly filed exemptions with the state or a member of a limited liability company do not count as employees).
- You are a farmer and have more than five (5) regular employees and/or twelve (12) or more other workers for seasonal agricultural labor lasting thirty (30) days or more.
Florida Statute 440
The Workers Comp Law
Work Comp Exemptions
Exclude Owners & Officers
Florida Workers Comp Specific
Find the latest information and rates about the class codes on your workers compensations insurance policy. These are used to categorize your employees by job duty.
2022 Florida Workers Comp Rates
View the New Rates
Workers compensation rates change each year. Find out whether the rates for your class codes are increasing or decreasing from last year.
The manual rates are issued by the Florida Office of Insurance Regulation after being analyzed by the National Council on Compensation Insurance (NCCI).
What Is The Assigned Risk Pool, and Why Are You In It?
Being a commercial lines insurance agent at Viking Insurance Services, I inherently speak with a lot of business owners on a daily basis. As a commercial lines insurance agency specializing in bringing clients out of the workers compensation assigned risk pool, a lot of those business owners are in their state workers compensation risk pool. Roughly half of the clients I speak with don’t know that they are in the assigned risk pool, and/or have no idea what it is. Even fewer know the actual reason they are in the pool to begin with.
So, What is the assigned risk pool?
The IRMI (International Risk Management Institute) defines the assigned risk pool as “a method of providing insurance required by state insurance codes for those risks that are unacceptable in the normal insurance market.” In plain English that just means that it is meant to be a market of last resort for high risk policies, where the insured has not received voluntary offers directly from insurance carriers.
Depending on a number of factors, your business may not be an acceptable risk to standard carriers. Your agent may be submitting dozens of applications, and receiving declination after declination. In that event, you are fortunate to have access to workers compensation coverage through the state risk pool. Without it, you simply would not have access to coverage for work related injuries your employees may sustain.
The being said, more often than not, the clients I speak with have no business being in the assigned risk pool.
Different states, different rules
Each state has its own workers compensation risk pool. While many states use an organization called NCCI to administer their workers compensation program, there are some who administer their own program, as well as North Dakota, Ohio, Washington, Wyoming, Puerto Rico, and the U.S. Virgin Islands which are monopolistic funds.
The rules and requirements vary from state to state, especially when comparing NCCI administered states to independent and/or monopolistic states. It is always a good idea to speak with your agent if you have questions, or check with your local governing body. We have listed links at the very bottom of this page to many of the state insurance commission websites.
Why are the rates so high in the assigned risk pool?
This is a question I get asked all the time. The answer is really pretty straight forward: The assigned risk pool is meant to be a market of last resort for high risk companies, therefore the businesses who are in the assigned risk pool /SHOULD/ all be high risk operations. That being the case, the rates are meant to be commensurate with the risk the insurance companies are taking in insuring this group of high risk policies.
Rates vary from state to state, but in general it is safe to assume that the rates in the pool are the highest available for most workers compensation class codes. In fact, many standard voluntary market carriers use the assigned risk pool rates as a basis to discount their rates against.
Should you really be in the assigned risk pool?
The answer to the above question is often no. There are dozens of workers compensation insurance carriers in the United States, and all of their underwriting appetites are different. What would be a decline for many, may be what another specializes in.
For example, General Contractors are a very difficult class of business to write workers compensation for. There are very few carriers who are willing to write policies when more than 25% of the labor is subcontracted, let alone 75-85% of their labor being subcontracted as is standard with GC’s. That is not to say that you should be in the assigned risk pool though, because there are carriers who specifically write coverage for these types of operations.
Here are a few other common misconceptions on why an account is in the pool:
- Less than three years prior coverage
- High risk occupations such as roofing contractors and arborists
- History of previous claims or losses
- High employee turnover rate
The above reasons are mostly untrue. We write new businesses, with zero prior coverage, in standard voluntary markets every day. Just because you have had some claims doesn’t knock you out either. There are many carriers who will consider offering coverage for accounts with prior losses, and there are even carriers who prefer to write these harder to place risks. We also have carriers who like to write roofers, tree crews, and even cell phone tower installers. With regards to employee turnover, I am asked that question a handful of times out of hundreds of applications.
In reality, the most common reason I come across in dealing with companies who are in the assigned risk pool is that they are dealing with a captive agent. That is probably a term you have never heard before, but what is means is that they are only allowed to write business with one carrier. Examples of captive agents would be Nationwide, Allstate, State Farm, Farmers, etc. So, if you call your local captive agent and ask them to quote your business insurance, the only company they are able to offer quotes with is the one company they work for. What if that company doesn’t write workers compensation in your state, or they don’t write your class of business? You end up in the assigned risk pool.
Alternatively, independent insurance agencies are able to be contracted with various insurance companies. This gives independent agencies the ability to hunt for the best coverage, at the best price, with many different carriers. For more information on why an independent agent is the right choice for you business, check out this article.
Here are some valid reasons to be in the assigned risk pool:
- Experience modifier above a 1.3 to 1.5
- Major claim within the past two years, often in excess of $100k
- Paying employees 1099 when they should really be W2
- Low payroll or no payroll, generally below about $20K annual payroll is tough to place
Save money on your workers compensation by getting out of the pool
As I mentioned above we specialize in bringing clients out of the assigned risk pool. On average we are able to reduce the rate you are paying for your workers compensation coverage by 30-50% by obtaining coverage in the voluntary market. Despite the amount of payroll you are running, and the class code your labor falls under, the savings are almost always substantial.
In addition, the way you pay for your policy will likely change dramatically as well. With assigned risk pool policies insureds are generally required to pay either the entire annual premium or at least a 50% down payment. When coverage is secured in the voluntary market, carriers generally only require 10% down with ten equal monthly payments. There are also “pay-as-you-go “ options which require an even smaller down payment, and give the ability to report payroll on a monthly basis, paying only for what is actually used. Another perk of the latter option is that the carrier generally eliminates the annual audit since the payroll has been reporting monthly.
How to know if you are in the assigned risk pool
If you don’t know if your business is in the assigned risk pool, there are a few ways to figure it out.
First and foremost, just ask you agent! This should not be a secret, and if your agent has withheld this information from you…you need a new agent. If you are absolutely married to your agent because you have been with them for years and when you think about making a change you are left thinking “I wish I knew how to quit you,” something amazing will likely happen when you ask your agent if you are in the assigned risk pool. Nine times out of ten they are going to miraculously come back with a substantially better price for your renewal. If you would like to know WHY that is going to happen, read this little article about the _*types of insurance agents*_ out there.
The second option is to simply give us a call. Our agency, Viking Insurance Services, has access to the full list of all businesses currently in the assigned risk pool in the states we operate in. In a matter of about 5 minutes we can determine whether you are in the assigned risk pool, tell you if we think we can get you out, and give you an idea of what the rates will look like if we are successful.
The bottom line
The bottom line is that many of the businesses we speak with do not belong in the assigned risk pool and are paying significantly more than they should be for their workers compensation coverage.
We know your time is valuable, which is why we have streamlined our processes to take up as little of it as humanly possible. That said, I propose the following question: Would saving even 15% on your workers compensation premiums be worth a total of 10-15 minutes of your time?
Then what are you waiting for? Give us a call today to find out what Viking Insurance Services can do for you.
As promised, here are the links to your states insurance commission’s website:
Georgia State Board of Workers’ Compensation
North Carolina NC Industrial Commission Information for Employers
South Carolina SC Workers Compensation Commission
Virginia Employers | Virginia Workers’ Compensation Commission
TN Injuries at Work
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Home » Labor Laws » Workers Compensation
Florida Workers Compensation Insurance Requirements
Every state in the United States enacts its own workers’ comp law, and the state of Florida is no different. In the State of Florida, most businesses with four or more employees are mandated to carry workers’ compensation insurance.
This insurance policy provides legal protection to employees when they suffer injury or illness as a result of their job. Once a claim is submitted, workers’ compensation guarantees that the employee’s medical treatment or rehabilitation is paid.
Workers’ compensation is, without doubt, a very important aspect of small business insurance especially since it can cover medical bills, recovery costs, and partial missed wages if an employee is injured at work. In addition, it can help with funeral costs and benefits in the event of a fatality on the job.
By mandating this insurance coverage, Florida officials offer an incentive for businesses to keep employees safe. The Florida workers’ compensation system has been massively debated over the past few years, as lawmakers and work comp regulators seek ways to control insurance costs.
In Florida, workers’ compensation laws tend to apply just to businesses with four or more employees. Note that smaller businesses may be exempt from the state’s workers’ compensation laws, and injured employees would have to seek damages for medical care or lost wages through another avenue.
Requirements for Workers Compensation Insurance in Florida
Employers doing business in the State of Florida are expected to provide workers’ compensation insurance for their employees. Have in mind that specific employer coverage requirements are based on the type of industry, number of employees, and entity organization.
To understand the coverage requirements for a specific employer, below is information made available by the Bureau of Compliance.
Note that construction businesses in the State of Florida with at least one employee are expected to have workers’ comp insurance. Note that in the construction industry, owners, corporate officers, partners, and sole proprietors are considered employees, too.
It simply entails that you will be expected to obtain workers’ comp insurance coverage as soon as you start your construction business—and definitely before you begin any projects.
According to Florida law, a company is a construction business if it partakes in the building, clearing, excavation, or carrying out any kind of major updates to a building (or any kind of land). Therefore, if your business generates revenue from any of those, then you are considered a construction company and will have to obtain workers’ compensation insurance.
For businesses that are not in the construction industry, note that you will be expected to obtain workers’ compensation insurance if you have 4 or more employees. Note that it doesn’t matter if they’re part-time or full-time, as long as you employ them, they all count in the state of Florida.
When it comes to businesses that fall within the non-construction category, sole proprietors and partners are automatically exempt from coverage.
Businesses in the agricultural industry are expected to obtain workers’ comp as long as they have 6 or more full or part-time employees—or if they have 12 or more seasonal workers (any hired help who works more than 30 days in a season, but no more than 45 days in a calendar year).
In the state of Florida, any labor carried out on a farm—or for one or more farmers—is regarded as work at an agricultural business.
This will notable jobs like harvesting and machinery operation coupled with timekeepers, checkers, and other supervisory roles. In addition, if you hire at least 6 regular employees—or if you simply hire a bunch of temporary workers for a 6-week harvest—you will need to purchase workers’ comp.
In the state of Florida, you are not expected to obtain workers’ comp to hire or work with subcontractors. However, you will be expected to show valid proof that a particular subcontractor has obtained their own workers’ comp.
If a subcontracted worker gets injured on your project and doesn’t have their own workers’ comp policy, have it in mind that you will be tasked with making payment of benefits. When looking to work with a subcontractor in Florida, note that you will need at least one of the following:
- A copy of the Information Page of the subcontractor’s workers’ comp insurance policy.
- Screen capture from the Division of Workers’ Compensation validating coverage.
- A Certificate of Liability Insurance and written documentation obtained from the insurance carrier validating that the subcontractor has workers’ comp.
- If your subcontractor is a corporate officer, they can supply you with a Certificate of Election to Be Exempt.
In the state of Florida, you are not mandated to purchase workers’ comp insurance for independent contractors, as long as their employment is casual and not associated with the primary functions of your business. For instance, if you hire someone to clean the gutters outside your office every month, you won’t be expected to cover them with workers’ comp.
However, if there is proof or evidence that the supposed independent contractor was in any way a part-time or full-time employee of your company, you could get yourself into trouble, and you could be fined $5,000 per instance for falsely representing an employee as an “independent contractor.”
Note that the answer here will most often depend on your professional industry. For instance, if you have a construction business in another state but have one or more employees working in Florida, you will be expected to purchase a Florida workers’ comp policy.
Also, note that you will require a policy if you run a non-construction business with 4 or more Florida Workers. However, if you intend or you have already sent workers to Florida temporarily, and you come from a state with an Extraterritorial Reciprocity policy, you won’t be expected to obtain a workers’ comp policy just for Florida.