Assigned Risk Plan Explanation – Necessary And Expensive
An Assigned Risk Plan is frequently called the Pool.
The Assigned Risk Plan is a mechanism established by individual states to make sure that employers can obtain WC insurance even if insurance companies are not willing to write such insurance on a voluntary basis. Assigned Risk plans in many states carry higher rates than the voluntary market.
One caveat – The State Fund of California, often referred to as SCIF does not function as this type of insurer. SCIF does not necessarily have to accept your company. SCIF does provide a procedure by going through an intermediary to apply for coverage.
If your company is in the Pool, your company must do everything that is possible to get out of it ASAP. Why?
For instance. in a certain state, the Advisory Loss Cost for an Administrative Assistant Classification Code (8810) was 41 cents per $100. The same 8810 Classification Code in the Risk Pool was $1.41 per 100.
That is almost a 400% increase. How does a company remove themselves from the Risk Pool? The main method requires a large amount of patience by a company’s senior management or the owner of a small company.
Removing a company from the Assigned Risk Pool is not that easy. Other than a market with no carriers, something occurred over the last 5 years that increased your Experience Mod to a high risk level.
We will talk about that next time.
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