Workers’ compensation options

In the default application, PolicyCenter handles a number of workers’ compensation options such as inclusions and exclusions, policy plan type, and specialty operations.

Inclusions and exclusions in workers’ compensation

Workers’ compensation in PolicyCenter allows the following inclusions or exclusions from the policy:

  • Include or exclude individuals – In general, jurisdictions require employees to be covered by workers’ compensation insurance. There are a variety of circumstances in which employee status requires clarification. As a result of these clarifications, individuals or classes of individuals may be included or excluded from coverage. All entries have significant impact on coverage and forms inference.
  • Include or exclude owners and officers – The application allows you to specify owners and officers with their jurisdiction, title, and ownership percentage. Each officer may be designated as included or excluded. You must enter a classification for included officers.
  • Exclude operations or jobs – The exclusions option allows the insured company to exclude operations or jobs. For example, the insured may want to exclude a construction site because another type of policy covers this site.

Policy plan types in workers’ compensation

Workers’ compensation in PolicyCenter includes the ability to designate and define an appropriate policy plan such as a retrospective rating or participating plan. PolicyCenter stores the data for forms but does not do any calculations for retrospective rating or participating plan.

Retrospective rating plan

A retrospective rating plan looks at the loss experience of the policy after its expiration in order to recalculate the premium. The policy is initially rated and issued with the appropriate jurisdictional rates. At predetermined intervals after policy expiration, the premium is recalculated based on agreed upon factors, and the amount paid by the policyholder for the policy term is adjusted.

PolicyCenter stores the values needed to administer the plan and calculations; you will need to implement the premium calculations including the linking of multiple concurrent policies.

Participating plan

A participating plan looks at the experience of all policyholders participating in the plan to determine profitability of the plan sometime after policy expiration. This experience may result in a dividend to the plan’s policyholders. Although there is considerable variability in plan design, some common elements are:

  • Plan ID – Defines all factors which are invariable for that specific plan.
  • Retention – The percent of the premium that the insurer always keeps.
  • Loss Conversion Factor – A factor which is applied to losses when calculating dividends.

Specialty operations in workers’ compensation

Workers’ compensation in PolicyCenter supports specialty operations such as federal liability, waivers of subrogation, employee leasing, and aircraft seat surcharge.

Federal liability

This coverage departs from workers’ compensation principally in two ways. First, it is tort based rather than being a no fault defined benefits system. Second, it applies to only two industries: the operation of US flag vessels and the operation of railroads. Maritime coverage is also referred to as Admiralty or Jones Act. Liability for railroad operations is typically referred to by the acronym FELA.

The federally sanctioned programs are:

  • Program I – This program is pure tort. Recovery is based on determining fault.
  • Program II – This program gives the injured employee the option of tort relief or benefits under workers’ compensation jurisdictional act or U.S.L.&H.

    After selecting a program and selecting the appropriate federal liability law, you can enter federal liability class codes for different types of employee activity. For Program II, these class codes subsequently translate into domain specific jurisdiction or U.S.L.&H. codes. The user interface does not display the domain specific codes. The federal liability class codes appear in the printed policy. All codes impact coverage and forms inference.

Waivers of subrogation

This is a contractual agreement between the insured and the insurer to prevent the insurer from subrogating to a named third party in the event of a loss. A waiver can be on a blanket basis which applies to all workers' compensation exposures. A waiver can also be on a specific basis which applies to a named job, contract, or event. In the case of specific waivers, exposure information is collected to calculate a charge for the job, contract, or event. A insurer may choose to specify a flat charge for these waivers or waive specific charges (as a matter of policy or on an exception basis) until final audit.

Employee leasing

The employee leasing option allows you to define contractual information if the named insured is either a labor contractor or obtains employees from such a contractor. This information includes names and dates for contracts and whether the policy includes or excludes coverage. If the employer is a labor contractor and supplies employees to others, you can specify labor clients. If the employer obtains employees from others, the details are about that labor contract.

Aircraft seat charge

The aircraft seat charge option allows you to obtain details required for a passenger seat surcharge and endorsement per aircraft.