Workers' Compensation
Plan Comparison And Analysis Recap
Guaranteed Cost
Premium Size: All accounts under $100,000
Advantages:
Fixed cost
No premium impact in current year
All inclusive
No Risk Involved
Disadvantages
Higher policy year costs
No savings on good years
Subject to market whims
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Retrospective Rated
Premium Size: Minimum $100,000
Advantages:
Simplest way to share in risk
Ability to pay less
Expenses stay with the carrier
Collateral usually not required
Disadvantages
Cost can increase
Recalculations may negate returns
Multi-year process
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Deductible Plans
Advantages:
Reduced up front costs
Greater potential for savings
Greater cash flow
More control over claims and Loss Control
Disadvantages
Increased risk of higher costs
Collateralization required
Long term process
Large premium and assets req.
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Captive Programs
Premium Size: $250,000 plus
Advantages:
Stability of coverage and pricing
More control over claims and service
Return of unused loss fund and invest. income
Lower fixed costs
Can participate at lower premium levels
Multi-state capability is easier
Disadvantages
Possible significant penalties
Long-term capital investment
Pyramiding of letters of credit
Responsibility for other's losses
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Self Insurance
Premium Size $1,000,000
Lowest fixed costs
Maximum use of cash
Maximum control over claims
Experience tends to improve
Disadvantages
Government regulations, controls and monitoring
Highest degree of risk
Requires substantial commitment in resources and manpower
Difficult in multi-state situations
Ties up credit and capital to the greatest extent
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For Information on Retrospective Rated Plans: Click Here
For Information on Deductible Plans: Click Here
For Information on Captive Plans: Click Here
For Information on Self-Insurance Plans: Click Here
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