Product Update

Loss Sensitive Insurance and Workers Comp State Laws Topics Updated in Construction Risk Management


This release of Construction Risk Management contains an updated discussion of loss sensitive insurance plans and an updated summary of state workers compensation laws.

Loss sensitive insurance programs offer the opportunity to reduce insurance costs below what the insured would pay under a guaranteed cost program. In addition, loss sensitive plans provide cash flow benefits by charging a lower premium up front and adjusting as losses become known. The trade-off is a sacrifice of some stability because actual losses may be reflected in their current year's operating results. Some of the more common loss sensitive options are dividend plans, large deductible plans, and retrospective rating plans. Loss Sensitive Insurance outlines the advantages and disadvantage of this risk financing option and provides insights into how to get buy-in from management, how to assess the potential impact of an increased retention, how to measure if lower premium trade-off is adequate, and how to mitigate the potential conflict of interests loss sensitive programs create for insurers.

Workers compensation laws and benefits differ dramatically among states. These differences in state laws and benefits can expose businesses to liabilities far greater than expected, and properly insuring these risks may require modifying the policy with one or more endorsements. Workers Comp—State Laws provides insight into some of the key differences that impact contractors, including types of allowable insurance, exempt employments, whether subrogation waivers are allowed, treatment of occupational disease in the law, and whether independent contractors and leased employees are considered "employees" for workers compensation purposes, to name a few.