Similar employers join together to insure themselves
A self-insured group or Trust is an association of employers formed for the specific purpose of providing statutory workers compensation coverage.
The groups usually form “trusts” which are organizations of similar employers that band together to provide less-expensive insurance coverage for workers injured on the job with the understanding that, if money ran out, the employers, and not a traditional insurance company, would be responsible to cover shortfalls.
Groups desiring to self-insure must receive approval from the Indiana Department of Insurance. Indiana generally does not have Groups with two exceptions:
- Indiana Public Employers Plan (IPEP) is a non-regulated insurer that could be considered in the group self-insurance category.
- Public School Corporations can create insurance trusts (“school trusts” or “school pooling”). Effective 5/14/08, the Indiana Department of Insurance implemented Final Rule LSA Document #07-144(F) which adds 760 IAC 1-75 to create regulations for the insurance trusts.
Section 5(c) of the regulation requires carriers to report data to the ICRB: “the primary or excess insurer shall report data required by IC 27-7-2-28.1 to the ICRB for the risk pool and for each individual risk pool participant.”
Section 7(b) of the regulation requires that the ICRB produce experience ratings upon request: “(b) If the risk pool offers worker’s compensation through an insurer, the trust administrator shall maintain and provide, at the request of the risk pool participant, the accurate individual risk pool participant’s own distinct experience modification factor calculated in accordance with the rules of, and acceptable to, the ICRB.”
Section 14 of the regulation requires these notices:
(a) The application for participation and the participation agreement must contain the following statement: “This is a fully assessable contract. In the event (the Risk Pool) is unable to pay its obligations, participating members will be required to contribute through an equitable assessment the money necessary to meet any unfulfilled obligations.”
(b) Every application and coverage form must contain the following notice: “Your coverage is issued by a Risk Pool. The Risk Pool is regulated by the Indiana Department of Insurance. State insurance guaranty funds are not available for your Risk Pool.”