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The COVID-19 Pandemic: Opportunities and Implications for Captive Insurance

The COVID-19 Pandemic: Opportunities and Implications for Captive Insurance

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The COVID-19 Pandemic: Opportunities and Implications for Captive Insurance explores the challenges presented by today's business and economic upheaval, as well as the hardening insurance market, and what it means for the captive insurance industry.

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Is Proposed Tennessee Law the Future of Workers Compensation?

Disability Insurance
February 25, 2015

Proposed legislation in Tennessee would allow certain qualified employers to provide injury coverage to employees through a self-funded benefit plan instead of purchasing coverage through the commercial insurance market.

Both the Senate and the House of Representatives in Tennessee have given their approval to the "Employee Injury Benefit Alternative," and it is now being considered by committees. Texas and Oklahoma have similar laws. 

“The core focus of the Tennessee option is to help injured employees get back to work faster,” State Senator Mark Green, who introduced the proposal, stated in a news release. “Making that happen requires good benefits, strong communication, and will lead to higher employee satisfaction.”

The meteoric rise in the cost of workers compensation coverage is driving a number of forces in the industry and is leading to further study and introduction of alternatives. Traditional workers compensation insurers are likewise trying to mitigate their own risk by increasing deductibles and self-insured retentions, as well as by underwriting the riskiest professions based on the national increase in new workers compensation benefits. For instance, the rash of presumption clauses for firefighter and police officer injuries associated with cancers and heart diseases, whether warranted by statistical correlation or not, is definitely putting upward pressure on loss costs. When loss costs go up, premiums go up.

For captives, this possible new alternative to traditional workers compensation coverage might offer a business opportunity. As determined by the proposed Tennessee Employee Injury Benefit Alternative, a qualified employer’s benefit plan would need to meet certain requirements, but catastrophic insurance and reinsurance will still be necessary (or at least should be necessary, for a responsible risk manager!). Providing employers mechanisms for self-funding through captives or providing catastrophic policies might be an excellent opportunity for captives searching for new business.

For a more detailed summary of the proposed Tennessee legislation, see the workcomp writer blog.

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