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Workers Comp Residual Market Forum – NCCI Covers Underserved Niche

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NCCI Workers Comp Residual Market Forum – Quiet Market Segment Review

Last week, I attended/watched the NCCI Workers Comp Residual Market Forum.  The Forum was usually provided to carriers only in the past.  I decided to not pass up the chance to see the numbers on a huge market that often is not mentioned other than as a small presentation in some of NCCI’s State Advisory Forum.

The three areas that you should check out are at this link.  Even though the Residual Market Training section was provided for carriers, you can find great info on how assigned risk pools operate.   Many states have their own sections on assigned risk pools.  I will cover which states NCCI provides assigned risk services later in this article.

Residual Market Definition

Before we cover any material provided by the conference, let us look at what is a residual market in Workers’ Compensation.

The residual market, also known as assigned risk pools, contains the employers that cannot find coverage in the voluntary market.   The risk pools then become the providers of assigned or direct insurance carriers in the pool.  These carriers are the insurers of last resort.

Residual markets are not necessarily completely high-risk companies.  Sometimes, the overall market will not write a certain set of employers.  I have seen staffing agencies; trucking and transportation; and janitorial companies to have no voluntary carriers write coverage in a certain state.

Some of the employers had Mods below .90, which indicates a lower risk.  We have received many questions on this situation over the years.  One employer had a .80 Mod and could not find coverage in the voluntary market.

The State of the Workers Comp Residual Market Presentation

Cliff M​erritt, Senior Division Executive—Residual Markets presented a few surprising numbers.  As with most conferences, forums, and webinars, I am searching for the numbers.  If you wish to have the PDF slides from his presentation, you can find them here.

One term that you will hear concerning the residual market is depopulation.  Depopulation means moving an employer out of the assigned risk pools.

Check out the next slide from the presentation – most policies that are covered in the Assigned Risk Plan administered by NCCI (22 states) are very small policies.   As a side note, there exists Pool and Plan data that may vary somewhat.

Slide NCCI Residual Market Forum Statistics
(c) NCCI, Boca Raton, FL Used with permission

The average policy sizes for 2020 and 2021 are under $4,000.  Policies under $5,000 represent 87% while policies under $10,000 represent 94%.   Only 6% are policies larger than $10,000.

COVID-19 Claims In The Residual Markets

I usually try to not cover COVID1-19 in articles presently.   This slide almost jumped off the screen.

NCCI COVID Claims
(c) NCCI – used with permission

The COVID-19 claims were lower than I would have anticipated for the Assigned Risk Pool data.   Notice that seven states reported no COVID-19 claims.  I could be missing something, but that shows safe workplaces within a higher-risk pool of employers.

Bottom Line>>> The workers comp residual markets may require another look by agents/brokers, carriers, and consultants.   An underserved niche is there to service using the proper applicable data.

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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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