Defense Firms Are Going to Pool their Workers Comp

Share on facebook
Facebook
Share on twitter
Twitter
Share on linkedin
LinkedIn

Defense Contractors Working Overseas

Workers comp coverage for defense contractors working overseas may shift to a single insurer in the near future under a law recently signed by President Bush. The idea is based on risk pooling as a way to cut costs.

Vector art of people around globe Defense Contractor Overseas
123RF

I have always been a supporter of pooling risks as long as the pool was large enough to invoke the law of large numbers.

The 2009 Defense Authorization Act will completely pool all of the workers comp coverage for overseas defense contractors and place the coverage with one provider. The pooling of workers comp risks with one provider was initiated due to a very sharp increase in accidents and payouts in 2006 and 2007.

Overall, this may be a good strategy. However, there are two concerns that may make a single provider cost even more $:

  • A single provider may not be able to handle the giant influx of claims. This would result in poor service and even a sharper increase in costs.
  • The Department of Defense does not keep a loss history, which is beyond critical in providing data for a request for proposal.

There are other concerns that the insurance industry noted. We will have to wait about 7 years to see the results of this move due to the long term development of the workers compensation claims.

 

©J&L Risk Management Inc Copyright Notice

Share on facebook
Facebook
Share on twitter
Twitter
Share on linkedin
LinkedIn

Table of Contents

Related...

James Moore

Raleigh, NC, United States

About The Author...

James founded a Workers’ Compensation consulting firm, J&L Risk Mgmt 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

Subscribe

Get the latest workers' comp news FREE!

Name
This field is for validation purposes and should be left unchanged.