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Captives for Workers Comp – One Overlooked Area

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Captives for Workers Comp – Who Adjusts Your Claims

Most Captives for Workers Comp should not overlook the claims administrator which will handle your claims.

Picture of Captives for Workers Comp Businesspeople Standing
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Over the last four years, captive insurance arrangements have become more prevalent in our business. That is not to say that captives have not existed in Workers Compensation markets for very long. I had come across them in the early 1990s. They were known as offshore insurance.

The company was a very large South Carolina lumber operation. They were moving their Workers Compensation from the carrier where I was adjusting claims, to this new kind of insurance. My question to them, as it is today – By, the way who will be handling your claims? I kept in contact with the insured to see how things were going and there were a few residual claims.

The lumber processing company had no answer to that question. I was told at the time – and I still hear the same thing today – That is not a major concern.

Without covering the operations of a captive, I wanted to issue one caveat. You are now more like a self-insured. The claims adjusting company is really spending right out of your bank account. The quality of the claims adjusting company should be a major consideration.

Woman Wrapping Man Hand Captives for Workers Comp Injured
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Why I pointed out the South Carolina lumber company is that over the next year when I had to contact them on a few claims issues, they would vehemently complain about the claims adjusting.

Injured employees were not getting paid, and medical providers were lighting up the switchboard with calls on very late bills. The lumber company was paying fines and fees due to late payments. Even the attorneys that represented the Workers Comp claims adjusting company were being paid very late.

The bottom line is that captives are just about the last forefront for smaller employers to be able to cut Workers Comp costs. I think there will be an explosion of captive insurance over the next 20 years unless the IRS creates rules that may affect their operation.

However, investigating who will be handling your captive Workers Comp claims will become even more critical. Asking that one question will save many headaches and time later as there is claims development.

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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

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