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August/September 2020  Volume 18, Number 4        

Excess Workers Compensation Comes in Two Basic Formats

Specific Excess Insurance limits the amount a self-insured must pay for any single occurrence.

After the self-insured pays a Self-Insured Retention (SIR), the insurance company will pay the rest of the claims up to a certain limit. See figure 1., illustrating a $750,000 claim where after the SIR of $500,000 is paid by the self-insured, the rest of the claim ($250,000) is paid by Specific Excess Insurance.

Aggregate Excess Insurance offers the self-insured protection if the total amount of losses they pay exceeds a certain amount. Those losses could consist of several large claims and an accumulation of smaller claims. Once the accumulation of claims paid reaches a certain limit, known as "the attachment point," the Aggregate Excess Insurance kicks in. For example, let’s say a self-insured company buys an Aggregate Excess policy for $1 million with an attachment point at $1 million. If they pay out $1.25 million in claims (including both first dollar and SIR claim amounts), they will get $250,000 from their Aggregate Excess Insurance carrier. (See figure 2.)

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In this issue:

This Just In...

COVID-19 Impact on Workers Compensation Industry

COVID-19 Liability Waivers

How Does Self-Insured Workers Compensation Work?

Excess Workers Compensation Comes in Two Basic Formats.



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