Insurance Handbook - Alaska Department of Community and ...

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Workers Auto Compensation
Insurance
the actual benefits received. The involvement of an attorney does not necessarily
indicate formal litigation proceedings. Sometimes, injured workers turn to
attorneys to help them negotiate what they believe is a confusing and complex
system. Increasingly, states are trying to make the system easier to understand
and to use.
The workers compensation system plays a major role in improving workplace
safety. An employer’s workers compensation premium reflects the relative
hazards to which workers are exposed and the employer’s claim record. About
one-half of states allow what is known as “schedule rating,” a discount or rate
credit for superior workplace safety programs.
Workers Compensation Residual Markets: Residual markets, traditionally
the market of last resort, are an important segment of the workers comp market.
Workers comp residual plans are administered by the NCCI in 29 jurisdictions.
In some states, particularly where rates in the voluntary market are inadequate,
the residual market provides coverage for a large portion of policyholders.
Terrorism Coverage: Since the terrorist attacks of September 11, 2001, workers
compensation insurers have been taking a closer look at their exposures to
catastrophes, both natural and man-made. According to a report by Risk Management
Solutions, if the earthquake that shook San Francisco in 1906 were to
happen today, it could cause as many as 78,000 injuries, 5,000 deaths and over
$7 billion in workers compensation losses.
Workers compensation claims for terrorism could cost an insurer anywhere
from $300,000 to $1 million per employee, depending on the state. As a result,
firms with a concentration of employees in a single building in major metropolitan
areas, such as New York, or near a “trophy building” are now considered
high risk, a classification that used to apply only to people in dangerous jobs
such as roofing.
STATES WITH A STATE-RUN WORKERS COMPENSATION FUND
Competitive with Private Insurers Exclusive
Arizona* Maryland Oregon North Dakota
California Minnesota Pennsylvania Ohio
Colorado Montana Texas Washington
Idaho New York Utah Wyoming**
Kentucky Oklahoma West Virginia
*Scheduled to be privatized by 2013.
**Compulsory for extra hazardous operations only. Employers with nonhazardous operations may insure with
the state fund or opt to go without coverage.
I.I.I. Insurance Handbook www.iii.org/insurancehandbook 77