Q. WHAT IS THE ASSIGNED RISK PLAN?
The Assigned Risk Plan or “Pool” provides workers’ compensation
insurance to employers who are unable to obtain coverage in the voluntary market.
Q. WHO IS ELIGIBLE FOR COVERAGE IN THE POOL?
Minnesota Assigned Risk coverage is only available to employers who have been
declined coverage in the voluntary market from an insurance company who is licensed
to write workers’ compensation insurance in Minnesota.
Q. WHAT CONSTITUTES A PROPER DECLINATION STATEMENT IN THE POOL?
Declinations must be obtained from insurance companies that are licensed to
write workers’ compensation insurance in Minnesota. Employers who have
had coverage in the voluntary market must be declined coverage by their current/latest
insurance company unless a non-renewal or cancellation notice has already been
filed with our office. It is improper for an employer to cancel their existing
coverage to voluntarily place their business in the Pool.
Q. DO MINIMUM PREMIUMS INCLUDE THE EXPENSE CONSTANT IN THE POOL?
Yes, minimum premiums in the Assigned Risk Plan include the expense constant
but it is important to calculate the employer’s actual premium to make
sure the minimum premium applies.
Q. ARE PREMIUM DISCOUNTS AVAILABLE IN THE POOL?
No. This program is not available in the Assigned Risk Plan.
Q. WHAT DOES IT COST TO INCREASE AN EMPLOYER’S LIABILITY LIMITS IN
THE POOL?
Increased limits of 500/500/500 cost 1% of the unmodified premium subject to
a minimum charge of $50. A 1mil/1mil/1million increase costs 5% of the unmodified
premium subject to a minimum charge of $150.
Q. WHAT IS AN EXPERIENCE MODIFICATION RATING FACTOR?
It is a credit or debit factor based on a business’ loss and payroll history.
Q. HOW DO EXPERIENCE MODS AFFECT PREMIUM?
Credit factors will decrease an employer’s premium and debit factors will
increase their premium.
Q. WHAT IS A RATING PERIOD?
Generally it is three complete years of policy data ending one year prior to
the effective date of the experience rating. Changing policy effective dates
may affect the data to be used in a rating period.
Q. HOW LOW CAN AN EXPERIENCE MOD FACTOR BE?
It is different depending on an employer’s business type and size. If an
employer is loss free, their modification factor is as low as it can get for
that particular rating year.
Q. ARE MODS REVISED IF A CLAIM CLOSES?
Mods are typically calculated once a year. Any changes to a claim during the
year are included in the next experience rating year.
Q. WHEN ARE MODIFICATIONS REVISED?
Mods are revised only in cases where the insurance company submits corrected
data.
Q. HOW DO I REQUEST A LOSS RUN?
Loss Runs need to be requested from the insurance company for the claim(s) in
question. MWCIA does not have access to loss runs.
Q. DOES CLAIM SEVERITY AFFECT MODS MORE THAN CLAIM FREQUENCY?
Generally claim frequency has a larger impact on your mod calculation. Multiple
claims that total $10,000 will have a greater impact on your mod than a single
$10,000 loss.
Q. HOW DOES OWNERSHIP AFFECT AN EMPLOYER’S EXPERIENCE MOD?
Loss history follows a business in most cases whether the business was sold
or just the assets were transferred. Businesses that share more than 50% common
ownership are subject to a single mod factor based on their combined data.
Q. WHAT IS A VALUATION DATE?
It is the date that the value of all claims on a policy is established. This
date is always 18 months after the effective date of the policy regardless of
the date of injury or the policy expiration date.
Q. WHAT IS A MCPAP FACTOR AND HOW DOES AN EMPLOYER QUALIFY?
The Minnesota Contractors’ Premium Adjustment Program (MCPAP) is a special
credit only program that was created for qualifying employers in the construction
industry. Eligible employers can receive MCPAP factors that provide up to a
25% maximum credit that is applied after the experience mod when calculating
the employer’s premium.
Q. WHAT PAYROLL NEEDS TO BE INCLUDED WHEN CALCULATING AN EMPLOYER’S
PREMIUM?
All of the payroll for regular employees of a business must be included except
for the premium portion of an employee’s overtime pay. Owners and family
members who either elect to be covered or are automatically covered according
to state statute are subject to specific payroll limitations and maximums.
Q. WHO IS EXCLUDED FROM WORKERS’ COMPENSATION COVERAGE IN
MINNESOTA?
Executive officers who hold 25% ownership in a closely held corporation with
less than 22, 880 total payroll hours for all corporate employees in the preceding
calendar year, member/owners of a limited liability company, partners of a partnership,
and sole proprietors as well as the parent, spouse, and children of all of the
excluded parties described above.
Q. WHY DOES THE EMPLOYER NEED TO REPORT THEIR FEIN AND UNEMPLOYMENT ACCOUNT
NUMBER?
These employer identification numbers are required in Minnesota for proof of
coverage purposes. It is important that insurance agents collect these two numbers
each and every time they complete a WC insurance application for the insurance
companies.
