What is Cherry Picking in Workers Comp?
Cherry picking is one of the old terms in insurance coverage including Workers Compensation. This very overused term can have a negative or positive connotation depending upon the audience and the writer’s or speaker’s intention.
This situation occurs when an insurance carrier seeks to have better than normal underwriting results by offering the very safe companies policies while not covering the normally safe or less than safe employers in a given state or region. Often, the carrier may heavily under-price the coverage to get the safe business.
Cherry picking may also occur when a carrier writes very unsafe companies while charging an extremely high premium as the coverage may not be available elsewhere for a certain employer. This is an uncommon occurrence unless the regular insurance marketplace is not writing coverage for certain employers (with certain classification codes.)
There has been a decades-long running debate on whether this practice is just good underwriting or that it throws off the marketplace for a certain group of cherry-picked employers.
I posted a blog recently on Travelers’ aggressive underwriting in West Virginia. I have not really seen anything that looks like cherry picking as they are writing almost all employers with varying classification codes and E-Mods.
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