WCRA to Distribute $600 Million to Minnesota Workers’ Comp Insurers, Self-Insurers, Policyholders

Approximately $383 million will go to insurers, $182 million will go to self-insurers, and $35 million will go to policyholders. Policyholders are the more than 100,000 employers in the state who had a workers’ compensation insurance policy in 2020. Any recipient whose portion of the distribution exceeds $15 will receive a check from the WCRA.

The allocation among those groups is based on WCRA statues and court decisions. Policyholders receive a portion based on their share of the workers’ comp earned premium.

“Our capital has grown in the last decade since the global financial crisis (2007-08) and really due to two primary factors,” said Heer. “On the asset side, our investment portfolio has achieved actual investment returns that have exceeded our expected rate by a fair amount and so our capital grew from that excess investment return. On the liability side, we saw reductions which was fairly consistent with what’s going on in the comp market, but we have a greater effect due to positive inflation.”

WCRA was established in 1979 by the Minnesota legislature in response to insurers who had stopped writing workers’ compensation policies because reinsurance was unavailable or unaffordable.

WCRA is a quasi-public, nonprofit association. Its 13-member Board includes insurer, self-insurer, employee and public representatives as well as two statutory appointments.

This is the fifth surplus distribution in WCRA’s history; the other four occurred between 1992-2000. WCRA’s net distributions total approximately $1.6 billion since the association’s founding.

Heer said the Board evaluated surplus distribution for a year. Over six months, the Board worked with the Department of Labor and Industry and the Department of Commerce before they brought the final proposal to both department commissioners. The Board voted unanimously for the distribution, which was approved by the commissioners.

WCRA has roughly $1.9 billion in capital, according to Heer.

“Over the 42 year history of the WCRA, the WCRA has actually returned more money than we’ve collected in premiums,” said Heer. “There aren’t any other reinsurers that I’m aware of that have given away more money than they have collected.”