Workers Comp Market For A Peo
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Tip: If you are posting a market request, include the state abbreviation in your post title to get better responses.
Tip: If you are posting a market request, include the state abbreviation in your post title to get better responses.
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- Insurance Journal Enthusiast
- Posts: 22
- Joined: Mon Dec 29, 2003 6:57 am
I am aware of some structures for PEOs specifically, that have been proposed that involve a fronting company issuing the policy, with:
1) a finite reinsurance program behind the front for losses limited to perhaps the first $500,000 per Occurrence, with Aggregate Limits that exceed the expected loss pick (with losses limited to that $500K) - up to some reasonable, actuarially determined confidence level, and
2) an excess WC market reinsuring the front, providing the Statutory Limits xs $500,000 per Occurrence, with an Aggregate Stop Loss attaching excess of the finite reinsurance limits (to provide "drop-down").
This allows the excess market to pick an attachment where they are comfortable (and pricing is cost-effective), and the client essentially funds a high percentage of the limits in the finite layer .... but since the finite agreement includes provisions for investment income crediting, and profit share payments, this is similar to retaining the risk in a captive for losses in the first $500,000, but with lower frictional costs compared to captive structure, or posting collateral (LOCs, cash, or surety bond) under a qualified self-insurance program.
However, the key is the front. If you would like to discuss the finite aspect described here, send me an e-mail.
Regards,
1) a finite reinsurance program behind the front for losses limited to perhaps the first $500,000 per Occurrence, with Aggregate Limits that exceed the expected loss pick (with losses limited to that $500K) - up to some reasonable, actuarially determined confidence level, and
2) an excess WC market reinsuring the front, providing the Statutory Limits xs $500,000 per Occurrence, with an Aggregate Stop Loss attaching excess of the finite reinsurance limits (to provide "drop-down").
This allows the excess market to pick an attachment where they are comfortable (and pricing is cost-effective), and the client essentially funds a high percentage of the limits in the finite layer .... but since the finite agreement includes provisions for investment income crediting, and profit share payments, this is similar to retaining the risk in a captive for losses in the first $500,000, but with lower frictional costs compared to captive structure, or posting collateral (LOCs, cash, or surety bond) under a qualified self-insurance program.
However, the key is the front. If you would like to discuss the finite aspect described here, send me an e-mail.
Regards,
PEO workers comp is a very complex market. Carriers are reluctant to write group policies for obvious reasons as they cannot touch and feel each risk. We have been successful, depending upon the state in securing workers comp on an individual basis for each client. Group policies have been almost impossible, even in the best of circumstances for a new program. Companies that already have a program and a track record (and that track record is good) can usually find a program.