Assigned Risk: Indiana Reinsurance Pool

All insurance companies that write workers compensation in Indiana by law must be members of the Bureau. The statute also grants the ICRB the authority of the Assigned Risk Pool Administrator for Indiana’s Workers Compensation Insurance Plan (WCIP).

The assigned risk market provides coverage for employers who are unable to obtain insurance in the voluntary market. In Indiana, all workers compensation carriers reinsure (share) in the results of the assigned risk pool.

The Indiana statute requires that all insurance companies must be “reinsurers as among themselves.” This means that they all share in the operating expenses and claims costs of the assigned risk market.

Even though only a few insurance companies are awarded contracts as Servicing Carriers to write and service the assigned risk policies, all member companies share in paying for the losses.

Indiana Reinsurance Pool

The Indiana Reinsurance ​Pool operates differently than the National Workers Compensation Reinsurance Association (NWCRA), also called the National Pool, with regard to the cash flow of assigned risk premiums and carrier assessments. The National Pool, which is administered by NCCI​, uses a cash flow approach wherein funds are distributed quarterly to all carriers in the State, less certain fixed expenses and losses paid. Over the ensuing years, these carrier distributions are “called back,” to pay claims and ongoing expenses. Uncollectible sums owed by insolvent carriers are assessed against the remaining Members.

In contrast, the Indiana Pool holds and invests funds at the Pool level, and makes distributions to and assessments from Pool member companies based on operating surplus and losses, not cash flow. The ICRB invests all funds on the carriers’ behalf, while virtually eliminating the financial burden associated with carrier insolvencies.

Articles of Agreement

Twelve agreements sets forth the framework for participation in the Indiana Pool reinsurance mechanism and are located behind the WCIP in NCCI Basic Manual Indiana Workers Compensation Insurance Plan of Operation for the Indiana Assigned Risk Reinsurance, available on NCCI’s website.

The Articles assure that all insurance companies are “reinsurers as among themselves” as required by Indiana law (IC 27-7-2-29). This agreement is a contract among all insurance companies who join the Indiana Pool. The Articles guarantee that the few servicing carriers who do all the work are reinsured (losses are shared) by all carriers in the state.

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