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Workers Comp Cost Savings For Your Company From Control


Workers Comp Cost Savings = Employer Control

How does the Workers Comp cost savings come from employer control?  I have covered the ways that almost any employer can apply some of the techniques used by fully self-insured employers to control Workers Comp costs. We started with what very small employers can do up to very large employers.

Picture of Dollar Sign Workers Comp Cost Savings Shadow
Wikimedia Commons – Svilen.milev

There is one area that I intentionally left out until now. Somewhere in the mix between small deductibles and fully self-insureds, captive insurance arrangements may be applicable. I recently had a client ask if they could have a captive when they were large enough to be fully self-insured. The marketer for the captive seemed to have them convinced that a captive was superior to being fully self-insured. I could not agree unless there was some arrangement about captives that I did not understand.

I have posted about captives in the past. The definition of a captive is:

Captive insurance companies are limited-purpose insurance companies established with the specific objective of financing risks emanating from their parent group or groups. They sometimes also insure the risks of the parent company’s customers. A captive is a risk management technique where a large corporation can finance losses by making payments to a wholly owned subsidiary called a captive insurer who then pays the losses.

Putting Money On Piggy Bank Workers Comp Cost Savings Concept
Wikimedia Commons – 401(K) 2012 flickr.com

If the captive only insures its single parent corporation and/or subsidiaries owned by the parent it is called a pure captive. Captives are located in many places offshore from the United States, including Bermuda, the Cayman Islands, Vermont, Guernsey, Luxembourg, Barbados, and the British Virgin Islands.

There are many advantages to captives. One of the areas that we have covered over the last few posts is control. Some of the control is turned over to a captive manager and the claims are usually handled by a TPA. One of the concerns that we have heard from captive insureds is the inferior claims administration by the assigned TPA. The other concern we have heard is when the fronting company or captive manager goes out of business. Who handles what then?

Captives are still very new to the Workers Compensation industry. Therefore, we cannot recommend the use of or the avoidance of a captive.

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James J Moore - Workers Comp Expert

Raleigh, NC, United States

About The Author...

James founded a Workers’ Compensation consulting firm, J&L Risk Management Consultants, Inc. in 1996. J&L’s mission is to reduce our clients’ Workers Compensation premiums by using time-tested techniques. J&L’s claims, premium, reserve and Experience Mod reviews have saved employers over $9.8 million in earned premiums over the last three years. J&L has saved numerous companies from bankruptcy proceedings as a result of insurance overpayments.

James has over 27 years of experience in insurance claims, audit, and underwriting, specializing in Workers’ Compensation. He has supervised, and managed the administration of Workers’ Compensation claims, and underwriting in over 45 states. His professional experience includes being the Director of Risk Management for the North Carolina School Boards Association. He created a very successful Workers’ Compensation Injury Rehabilitation Unit for school personnel.

James’s educational background, which centered on computer technology, culminated in earning a Masters of Business Administration (MBA); an Associate in Claims designation (AIC); and an Associate in Risk Management designation (ARM). He is a Chartered Financial Consultant (ChFC) and a licensed financial advisor. The NC Department of Insurance has certified him as an insurance instructor. He also possesses a Bachelors’ Degree in Actuarial Science.

LexisNexis has twice recognized his blog as one of the Top 25 Blogs on Workers’ Compensation. J&L has been listed in AM Best’s Preferred Providers Directory for Insurance Experts – Workers Compensation for over eight years. He recently won the prestigious Baucom Shine Lifetime Achievement Award for his volunteer contributions to the area of risk management and safety. James was recently named as an instructor for the prestigious Insurance Academy.

James is on the Board of Directors and Treasurer of the North Carolina Mid-State Safety Council. He has published two manuals on Workers’ Compensation and three different claims processing manuals. He has also written and has been quoted in numerous articles on reducing Workers’ Compensation costs for public and private employers. James publishes a weekly newsletter with 7,000 readers.

He currently possess press credentials and am invited to various national Workers Compensation conferences as a reporter.

James’s articles or interviews on Workers’ Compensation have appeared in the following publications or websites:

  • Risk and Insurance Management Society (RIMS)
  • Entrepreneur Magazine
  • Bloomberg Business News
  • WorkCompCentral.com
  • Claims Magazine
  • Risk & Insurance Magazine
  • Insurance Journal
  • Workers Compensation.com
  • LinkedIn, Twitter, Facebook and other social media sites
  • Various trade publications


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