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Waiver of Subrogation Endorsement – Excellent Analysis Chart

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Misunderstood Waiver of Subrogation Endorsement – Why You Should Read Your Workers Comp Policy

The Waiver of Subrogation Endorsement appears in almost all workers’ comp policies.   Almost all workers’ comp personnel and insureds do not ever read any policies.  Who wants to read 40 pages of droning on when the Dec Page covers everything one needs to know concerning a policy?   Please think again on that point.   Endorsements can change the face of a policy dramatically. 

picture waiver of subrogation insurance office
Wikimedia – François GOGLINS

Many articles appear in this blog on Subrogation.   The search for those articles can be found here.

If you check out a few articles written on endorsements, the need to be aware increases for any Endorsements which insurers add at the time of policy inception (start) or during the policy period.  Check out this article on the parts of a policy and this one on Endorsement. 

The Waiver of Subrogation Endorsement always meant (in my opinion) the carrier desires to retain the right to bring a lawsuit against any third parties.  The insured employer signs over those rights at the time the beginning of and during the policy.

The insurer wants an unfettered ability to recover any claims monies spent out with adjusting a claim.  Of course.  the insured would receive a credit for any recovered subrogation funds.  The carrier is Supposed To file correction reports with the rating bureaus (NCCI, WCIRB, etc.) that may result in a lower E-Mod for the employer.

Each employer willing to waive their right to recover from or litigate receives a credit.  Pull out your current policy or an old premium audit bill or statement.  The credit appears in both,  along with a nominal refund of sorts.

Understanding and applying the waivers may be of great benefit to employers.  Some states do not allow the carrier to bring suit against a responsible third party directly.   The carrier must ride on the coattails of the injured employee instead of moving the employee out of the way and litigating the responsible third party directly.

A great multi-state law office  MWL and Counsel Gary Wikert,  combined all the Workers’ Comp Waiver of Subrogation considerations in all 50 states.  Adjusters and their supervisory staff should keep a copy of the Waivers of Subrogation at their fingertips.   Insured employers should understand their rights under a Waiver of Subrogation.  Download that PDF file here.

Their introductory paragraph reads as:

Most state workers’ compensation laws, or cases construing them, allow the employer and its carrier to waive its right to subrogate against a third party that caused or contributed to an employee’s injury. The purpose of a subrogation waiver is not well understood and is a subject of some confusion in the marketplace. Most frequently, contracting parties agree to contractually require the inclusion of a waiver of subrogation endorsement in a workers’ compensation policy simply because the requirement is contained in the form contract, and has been for many years.

A recent NCCI Symposium in Virginia covered  Workers Comp mega-claims.  The number one mega-claims by far were automobile accidents.  Auto accidents remain the easiest claims for a work comp claims adjuster to subrogate the funds paid on a claim.

Sending a letter to the auto adjuster to retain the carrier’s lien is very easy.  Monitoring the status of the subrogation lien becomes critical.    I have reviewed more than a few files where the workers’ comp adjuster notifies of the lien and then lets it go at that point.  The injured employee’s liability claim attorney may not  pay one-third of the funds because of one letter.

Many WC adjusters tend to just specialize in one line of claims.   The specialization is fine except when subrogation potential appears in a claim.  When I started my insurance career in the 1980s, adjusters were almost exclusively multi-line.  In other words, the adjuster knew just exactly how to pursue a third-party Workers’ Comp matter as he/she had adjusted claims outside the Workers’ Compensation arena.

Download the above PDF.  You can thank me later.

 

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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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