CCG Frequently Asked Questions
Why Self-Insure?
While there are many advantages to group self-insurance, the most important one is the ability to save considerable amounts of money. With reduced expenses and properly managed and administered loss control and claims programs, savings can be substantial. It has been the group’s experience that when employers self-insure, they become more aware of insurance costs and are more supportive of programs to reduce losses and control claims. By working together in these areas with the service company, Landin Inc CCGSIA can produce outstanding results.
How Does it Work?
Each employer pays his/her normal workers' compensation premium contribution to the Group Self-Insurance Association. All money received by the Association is invested until such time as it is needed to pay claims or administration costs. After provisions for claims and expenses, the remainder is available for return to each employer based on the groups overall profitability and each employer's loss ratio for that plan year.
Where Do the Cost Savings Come From?
While the lower overhead costs will provide some savings; the largest saving will result from aggressive claims handling and effective loss control as provided by the service company. Unlike an insurance company, the premium contributions made to the association, along with reserves set aside for future claims payments, earn investment income for members. In addition, when a claim settlement is made for less than the reserved amount, the excess remains with the Association until it is paid out in premium refunds. Investment income generated from invested premiums will reduce your cost further.
What Do Is Meant By "Protected" Group Self-Insurance?
Self-Insurance has been made feasible through the availability of excess insurance which protects the self-insured against the unforeseen financial burden of a catastrophic (specific claim) and/or an unusual frequency of losses (aggregate claims) explained as follows:
Specific Excess Insurance: This is severity coverage. A severe accident can result in a sizeable claim that could be financially catastrophic. This coverage puts a pay out ceiling on any loss arising out of one accident. The coverage applies above this ceiling. For instance, if you have five workers injured in one occurrence, then the maximum payment by the Association would be the amount agreed to in the insurance contract. That amount is called the retention. The excess insurance would be above the retention in an amount agreed to in the specific excess insurance policy.
Aggregate Excess Insurance: This is frequency coverage, an unusually large number of claims can result in the aggregate of losses being much more than anticipated. This Association has become so large and stable that the Virginia Bureau of Insurance the group is allowed to self-insure the aggregate coverage.
What Am I Risking?
Signing the indemnity agreement makes each member jointly and severally liable to provide all employees with the benefits available to them under the Workers' Compensation Act. A prudent and conservative approach to the purchase of excess insurance reduces this risk significantly.
Can I Monitor My Claims?
Yes, you will receive a quarterly detailed report showing amounts paid for claims, earned premium contributions to date and your loss ratio to date. Also, you will note that the service company will quickly respond to any inquiry you have regarding a specific claim, claims in general or advise regarding a possible claim or claims with which you may be concerned. Teamwork and a free exchange of information and ideas are vital to the success of a group self-insurance association.
Why Has Commonwealth Contractors GSIA Been So Successful?
Success has been accomplished in five (5) ways:
- Administration costs are kept to a minimum
- Only firms with excellent loss records are selected for membership
- Investment income accrues and is returned to members
- Claims are investigated diligently before payments are made
- The groups loss control programs prevent many accidents