Assigned Risk: Eligibility FAQ's
This document answers frequently answered questions about eligibility for the assigned risk market and discusses situations that disqualify an employer for assigned risk coverage.
In summary, Indiana laws and assigned risk rules require:
from nonaffiliated carriers
one rejection from the current carrier (cannot be the assigned risk servicing carrier)
in writing with a record maintained
Indiana law, IC 27-7-2-28, requires rejections "in writing by any three (3) members of the bureau in the manner provided in this chapter." Our Plan rules require that one of the rejectors must be the current, voluntary market carrier. Also, we cannot accept a prior assigned risk carrier as a rejector.
Sometimes we receive an assigned risk application where the insured and agent have not made an attempt to place the coverage in the voluntary market. Their position is that no carriers are writing a certain class of business, so why even try.
Well, the Indiana WC Act clearly requires three rejections from carriers "in writing" and through "ordinary methods" (see statute citations below). So, the three rejections must come from carriers in the voluntary market. A rejection or nonrenewal from a servicing carrier in the assigned risk plan does not count. An agent must "try" three carriers in the voluntary market before we can assign coverage.
Although we may recognize that the voluntary market rarely writes certain types of businesses, the law does not provide for any shortcuts to get into the assigned risk plan.
27-7-2-28. Rejected risk - Duty of bureau.
"From and after July 1, 1935, all insurance companies authorized to effect worker's compensation insurance in this state, and being members of the worker's compensation rating bureau of Indiana, shall insure and accept any worker's compensation risk tendered to and rejected in writing by any three (3) members of the bureau in the manner provided in this chapter."
27-7-2-28.1. Assigned risk plan.
"(a) All companies authorized to write worker's compensation insurance shall participate in the assigned risk plan providing for the equitable apportionment among them of insurance that may be afforded to applicants who are in good faith entitled to but who are unable to procure such insurance through ordinary methods. ..."
The Basic Manual Indiana Assigned Risk Special Rules (green pages), Article II, 2.03, Declinations
"The employer or its representative shall maintain on record for this policy period the insurer name, contact person, address, phone number and date of contact and make such information available to the Plan Administrator or assigned carrier upon request."
If mailing the application, all checks, including premium financed checks, must be sent with the application.
Disqualifications for Assigned Risk Coverage
1. Offer of Regular Coverage
When a carrier makes an offer of regular (or voluntary) coverage, then an employer is no longer entitled to assigned risk coverage. IC 27-7-2-34 reads "...any member of such bureau may write any rejected risk as regular business in which event the risk so written shall no longer be treated as provided for in section 29 [IC 27-7-2-29] of this chapter."
To transition from an assigned risk policy to a regular (standard) market policy, the ICRB suggests this procedure:
the offering agent or carrier notify the servicing carrier of the offer;
the servicing carrier issues a cancelation notice giving 45 days notice of cancelation due to an offer of coverage in the regular market;
the offering agent or carrier notify the servicing carrier of the new regular market policy effective date so that it may cancel the current assigned risk policy at the same time the new coverage commences, so as to prevent any lapse in coverage or double coverage situation.
Note: The 45 days notice is the maximum number of days required in the statute (IC 27-1-31-2) for any type of cancellation of an in-force policy, so it appears reasonable to apply this timeframe to this situation.
2. Higher Rates
A carrier may offer an employer regular coverage in the voluntary market, but at rates higher than what might be available in the residual market. The law makes no distinction if the offer is better or worse than rates in the assigned risk market. Once such an offer is made, the statute tells us we can no longer maintain the employer in the assigned risk market.
3. Changing Agents
An employer is in the process of changing agents midterm and the new agent cannot find voluntary market coverage for workers compensation and applies to the assigned risk plan. The app review reveals current voluntary market coverage. The new agent advises that the current voluntary market coverage will be cancelled to coincide with the new assigned risk application. Under these circumstances, we would rule that the employer has valid voluntary market coverage and is therefore not eligible for the assigned risk market (the market of last resort). It is unfortunate that the employer is not satisfied with his agent and desires to make an agent change midterm. However, we cannot accept a cancellation by the insured as a valid reason to enter the assigned risk market. Only a cancellation by the carrier for Indiana statutory reasons outside the employer's control would qualify the employer to enter the assigned risk market. Those reasons are:
change in scale of risk
Other reasons that the carrier may cancel are a result of the employer's action/inaction and in such instances we also cannot accept these cancellations by the carrier as valid reasons to enter the assigned risk market:
4. "A" Carrier
An employer needs a carrier with an "A" rating or better as required by the job contract to earn the business. His voluntary market carrier has a "B" rating and our servicing carriers have "A" ratings. The app review reveals current voluntary market coverage. The agent advises that the current voluntary market coverage will be cancelled to coincide with the new assigned risk application. Under these circumstances, we would rule that the employer has valid voluntary market coverage and is therefore not eligible for the assigned risk market (the market of last resort). It is unfortunate that the employer's current carrier has only a "B" rating. However, we cannot accept a cancellation by the insured as a valid reason to enter the assigned risk market.
5. Waiver of Subrogation
An employer needs a carrier to issue a waiver of subrogation as required by the job contract to earn the business. His voluntary market carrier will not do it. The app review reveals current voluntary market coverage. Under these circumstances, we would rule that the employer has valid voluntary market coverage and is therefore not eligible for the assigned risk market (the market of last resort). It is unfortunate that the employer's current carrier will not attach a "Waiver of Our Right to Recover From Others Endorsement" (WC 00 03 13). However, the employer would still have a standard voluntary market policy which prohibits him from getting coverage in the assigned risk market.
6. No Pay - No Insurance
An employer cannot get an assigned risk policy if it has unpaid premium for policies within the past 12 months. Indiana Code 27-7-2-31 reads in part "No employer who does not pay the advance premiums or premium when due, shall be entitled to insurance, nor shall any coverage be extended until all obligations to pay worker's compensation insurance premiums contracted during the previous twelve (12) months have been paid."
Further, Indiana assigned risk Plan of Operation, Article II, 2.02(c) provides an employer is not in good faith entitled to insurance if "The Employer has an outstanding Worker's Compensation Insurance premium obligation or any other monetary policy obligation to a Member on previous insurance that is not subject to a bona fide dispute." Reference: The Basic Manual Indiana State Assigned Risk Special Rules (green pages), Indiana Workers Compensation Plan of Operation for the Indiana Assigned Risk Reinsurance Pool, Article II, 2.02(c), page 10.
Note that the Indiana Plan of Operation, Article I, defines an employer as “…enterprises that are affiliated as a result of common management or ownership.”
7. Regular Market Carrier in Rehabilitation
Financially troubled carriers may come under the supervision of a state insurance department with the goal to rehabilitate, or return the troubled company to normal again. In such cases, the rehabilitation process is less structured than the process for liquidation. For instance, the rehabilitator may decide to not cancel policies, but merely non-renew the business as policies expire. When this situation occurs, the carrier under rehabilitation is still providing regular market coverage, and the employer is therefore not eligible for the assigned risk market (the market of last resort) until this policy expires.
Note: Employers and agents may submit applications up to 60 days in advance of when coverage is needed. The NCCI RMAP System will reject any applications requesting effective dates more than 60 days in advance.
EXCEPTIONS (OK to get assigned risk policy):
A. Deductible, Coinsurance or Ex-med Offer
A carrier may offer an employer regular coverage in the voluntary market, but with a deductible, coinsurance, or retrospective rating requirement. In this instance, we would consider this to be a nonstandard policy because the employer is asked to assume some of the risk. The usual and customary provisions of a standard policy do not require deductibles, coinsurance, participation or medical exclusions. If the employer chose to refuse this offer, such employer could still be accepted into the assigned risk market.
It appears the statute supports this position. IC 27-7-2-29 requires "the bureau shall designate a member of said bureau whose duty it shall be to issue a policy containing the usual and customary provisions found in such policies therefor."
B. Multi-line, Commercial Package Offer
A carrier may offer an employer regular coverage in the voluntary market, but as part of a multi-line or package offer. If the insured does not take the entire package, then the carrier would decline to write the workers compensation portion. In this instance, we would consider this to be a declination from the carrier. If the employer chose to refuse the package offer but accept the workers compensation portion, but the carrier declines to write just the workers compensation portion, such employer could still be accepted into the assigned risk market.
C. Significant Downgrade in Rating
A carrier experiences a significant downgrade in its rating, has issued a non-renewal notice to the insured, yet coverage may still exist for several months. In this instance, we would permit the insured to immediately apply for assigned risk market coverage. A receipt of the notice of nonrenewal can qualify the employer as a rejected risk. If the employer has 3 additional rejections, then the insured can enter the assigned risk plan now rather than waiting for the effective date of the nonrenewal. The ICRB will allow an exception on a case by case basis.
Cancel Pro Rata
The statute directs that if an employer accepts coverage in the regular market, then the assigned risk policy must be cancelled pro rata (no penalty). This serves as an incentive for employers to continue to shop and find coverage in the regular market.
IC 27-7-2-35 reads in part "Any member may at any time write as regular business any risk which is carried by any other member as a carrying company, under the provisions of section 29 and such carrying company shall cancel such policy on a pro rata premium basis or thereafter carry such risk in its entirety as regular business."
Letter of Assumption
Sometimes, the new, regular market carrier takes some time to issue its policy. We do not want the record to misleadingly show that the policy was cancelled by the servicing carrier due to nonpayment when the insured isn't paying because it found coverage in the regular market. To avoid this situation, the new carrier can simply issue a "letter of assumption" to the servicing carrier. The letter should be on the carrier's letterhead (not email at this time), signed by a representative, and indicate that the carrier is writing the WC coverage for the insured.
|Agent Commission for Assigned Risk
, Articles of Agreement in WCIP
, Assigned Risk: Binder Date
, Assigned Risk: Change Agent or Servicing Carrier
, Assigned Risk: Deposit
, Assigned Risk: Files Open
, Assigned Risk: Players and Documents
, Assigned Risk: Recent Developments
, Assigned Risk: VCAP
, Indiana Insurance Guaranty Association
, National Pool
, Servicing Carrier Allowance
, Servicing Carrier Contacts
, Servicing Carrier Quota
, Servicing Carrier Standards
, Take-Out Credit Program