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Assigned Risk Plans – Blocked By Premium Bill Dispute

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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.

Picture of man doing Assigned Risk Plans on Board
123RF

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:

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  • 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.
  • Hand Pointing Assigned Risk Plans Notes
    StockUnlimited

    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.

New York Liberty Assigned Risk Plans Picture
Wikipedia – William Warby

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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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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