Assigned Risk Plans and Premium Bill Dispute
Some assigned risk plans may become quite complicated as in the case of a reader that found themselves in a quandary.
A Tennessee reader of our blog that found us in a Google search asked this question. We are about to renew our Workers Compensation policy. Our premium skyrocketed as we were forced into using an Assigned Risk Plan. What is the Assigned Risk Plan? How did we get there? How do we get out of it? Why are we not allowed into it with a premium dispute pending?
The Assigned Risk Plan (ARP) in Tennessee is also called the Tennessee Workers Compensation Insurance Plan. These rules are the same for basically all the assigned risk pools. These are some very basic requirements:
- Must be unable to obtain coverage in the voluntary market at a competitive price. Records of declinations (minimum of 2) must be provided, if requested, during the policy period.
- Presumed good faith eligible for the Plan in the absence of clear and convincing evidence to the contrary.
Must not have any outstanding premium obligations or other monetary policy obligations on any previous workers compensation insurance that is not subject to a bona fide premium dispute.
- Must comply with reasonable health, safety, premium audit, or loss prevention requirements.
- Must allow access to its records for audit or inspection under the policy.
ARP’s are usually the insurer of last resort in most states. Your company may not be in the ARP due to your E-Mod. Insurance carriers may have decided to not write a certain market in a certain states such as dry cleaners, for example.
The current writing carriers for the Tennessee ARP are Liberty Mutual Insurance Company, Berkeley Risk Administrators, Hartford Insurance Company, Employers Insurance of Wausau, and Companion Property and Casualty Group.
Your E-Mod was high enough to be a concern, but not high enough to cause you to going into the ARP. Insurance carriers may consider certain types of employers as too risky to underwrite, even with a lower E-Mod.
The reason for the increased premium is that your company was assigned to a participating carrier. Not all of the insurance carriers agree to underwrite companies in the ARP. The higher premium is due to the carrier having to write you an insurance policy without having any choice in the matter.
These sharp increases in premium can be very expensive. There are certain classification codes that differ by over 400% between the regular insurance market and the ARP.
The reason for your company being blocked is due to the fact that your pending premium dispute may not be documented properly or that you do not have a bona fide dispute with your previous or current carrier. What have you supplied to Assigned Risk Pool in reference to your dispute? Please make sure you have not let your policy lapse or your company may incur a very heavy fine.
Many employers have found it difficult to remove themselves once they have been placed in the ARP. Alternatives to the ARP are:
- Self Insurance – must be a larger company to self insure
- Captives – a good alternative, your company is still self insured and must bear the brunt of the risk, rent-a-captive is an interesting option
- PEO’s – growing in popularity, a good choice IF you work with the right companies. There have been many unscrupulous PEO’s in the news over the past few years.
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