Self-insureds (carry risk without insurance) are required to secure their obligation to pay compensation in the event of insolvency. About 170 employers in Indiana are self-insured as of November 2011, down from about 260 in 1992. They are regulated by the Workers Compensation Board of Indiana (Board). The Board maintains a List of Self-Insured Employers on its website. Current requirements include:
audited financial statement done within last 6 months
in business for 5 years, or a guarantee from parent corporation
specific and aggregate excess insurance
(Note: both specific and aggregate excess coverage written together can provide protection against the catastrophic occurrence (specific excess) and the unusually heavy frequency of claims (aggregate excess).
surety bond of at least $500,000
claims administration facility or approved service company
The Board may consider the following factors in determining if the employer could qualify for self-insurance.
(a) Profit and loss history.
(b) Organizational structure and management background.
(c) Compensation loss history and proposed excess insurance coverage.
(d) Source and reliability of financial information.
(e) Number of employees.
(f) Excess insurance.
(g) Guarantee by parent company.
(h) Surety bond.
(i) Claims administration.
(j) Dunn and Bradstreet rating, if any.
There are no uniform rules that apply to excess insurance. Excess insurance provisions differ widely from one carrier to the next. Each carrier files their own forms with the Department of Insurance.
A survey of the Self-Insurance Institute of America showed that about 175,000 employers covering 5 million employees participated in 500 group self-insurance funds in 38 states (12 states, including Indiana, do not permit such funds). They paid the equivalent of $2.5 billion in premium. source: Workers' Compensation Monitor, April, 1999
The Institute of Work Comp Professionals has an article on its website titled "The Good, The Bad, and The Ugly of Workers' Compensation Group Self Insurance Funds" that dicusses the pros and cons.
402 West Washington Street Room W-196
Indianapolis, Indiana 46204
317.232.3808 or 800.824.COMP
Indiana Self-Insurers Association
Executive Director: Robert A. Fanning, attorney at Due Doyle Fanning & Metzger, 317.635.7700
2000 K Street, NW, Suite 401
Washington, DC 20006