FAQ's
WHY SELF-INSURE? While there
are many advantages to group self-insurance, the most important
one is the ability to save considerable amounts of money.
With reduced expenses and properly managed and administered loss
control and claims programs, savings can be substantial.
It has been our experience that when employers self-insure, they
become more aware of insurance costs and are more supportive of
programs to reduce losses and control claims. By working
together in these areas with our service company, Landin Inc
we can produce outstanding results.
HOW DOES IT WORK? Each employer
pays his/her normal workers' compensation premium contribution
to the Group Self-Insurance Association. All money received
by the Association is invested until such time as it is needed
to pay claims or administration costs. After provisions
for claims and expenses, the remainder is available for return
to each employer based on the groups overall profitability and
each employer's loss ratio for that plan year.
WHERE DO THE COST SAVINGS COME FROM?
While the lower overhead costs will provide some savings; the
largest saving will result from aggressive claims handling and
effective loss control as provided by the service company.
Unlike an insurance company, the premium contributions made
to the association, along with reserves set aside for future
claims payments, earn investment income for members. In
addition, when a claim settlement is made for less than the
reserved amount, the excess remains with the Association until
it is paid out in premium refunds.
Investment income generated from invested premiums will reduce
your cost further.
WHAT DO WE MEAN BY "PROTECTED" GROUP
SELF-INSURANCE? Self-Insurance has been
made feasible through the availability of excess insurance which
protects the self-insured against the unforeseen financial burden
of a catastrophic (specific claim) and/or an unusual frequency
of losses (aggregate claims) explained as follows:
SPECIFIC EXCESS
INSURANCE: This is severity coverage. A severe accident can result in a
sizeable claim that could be financially catastrophic. This coverage puts
a pay out ceiling on any loss arising out of one accident. The coverage
applies above this ceiling. For instance, if you have five workers injured
in one occurrence, then the maximum payment by the Association would be the
amount agreed to in the insurance contract. That amount is called the
retention. The excess insurance would be above the retention in an amount
agreed to in the specific excess insurance policy.
AGGREGATE
EXCESS INSURANCE: This is frequency coverage, an unusually large number of
claims can result in the aggregate of losses being much more than
anticipated. This Association has become so large and stable that the Virginia
Bureau of Insurance allows us to self-insure our aggregate coverage.
WHAT
AM I RISKING? Signing the indemnity agreement
makes each member jointly and severally liable to provide all
employees with the benefits available to them under the Workers'
Compensation Act. A prudent and conservative approach
to the purchase of excess insurance reduces this risk significantly.
CAN I
MONITOR MY CLAIMS? Yes, you will receive a
quarterly detailed report showing amounts paid for claims, earned
premium contributions to date and your loss ratio to date.
Also, you will note that the service company will quickly respond
to any inquiry you have regarding a specific claim, claims in
general or advise regarding a possible claim or claims with
which you may be concerned. Teamwork and a free exchange
of information and ideas are vital to the success of a group
self-insurance association.
WHY HAS
COMMONWEALTH CONTRACTORS GSIA BEEN SO SUCCESSFUL?
Success has been accomplished in five (5) ways:
-
Administration
costs are kept to a minimum
-
We only select
firms with excellent loss records for membership
-
Investment income
accrues and is returned to members
-
Claims are investigated
diligently before payments are made
-
Our required loss
control programs prevent many accidents
