Underwriting Terminology for the Claims Examiner - 2

Saturday, November 9, 2002 | 0

In our first article we reviewed the definitions of common underwriting terms, and what they mean to the claims administrator. This article continues with some definitions, and also reviews some classes of employees who typically are, or are not, covered under a work comp policy despite what you might first think.

Coverage Inclusions/Exclusions

Some people that you might not think of as employees qualify for worker's compensation coverage. Other people that you might expect to be covered are specifically excluded under the insurance policy terms:

Inclusions

- Aliens, (i.e. undocumented workers, not extra-terrestrials)
- Minors
- Public Officers
- Casual Laborers/domestic workers may be covered
- Prisoners, during the period they are engaged in work performed under contract
- Working business partners, corporate officers and members of boards of directors, if they are not the sole shareholders in a company

Exclusions

- Independent Contractors
- Domestic workers employed by a parent, spouse or child
- Casual laborers/Other domestic workers who do not meet specified requirements
- Volunteers are excluded unless specifically endorsed onto the policy, if their only compensation is transportation, meals lodging or incidental expenses
- Sole owners and partners are not included in the policy coverage unless endorsed onto a policy
- If an insured entity is a corporation, and the officers are the sole shareholders, the officers are excluded unless they are specifically added to the policy by an endorsement
- Persons who are not regular employees are excluded if they participate in sports or athletics and receive no compensation except uniforms, equipment, meals, transportation and other incidental expenses

WCIRB

- The Workers' Compensation Insurance Rating Bureau is the California state required rating organization. It is non-profit and unincorporated. All insurance companies that underwrite workers' compensation coverage in California are required to belong to the WCIRB and are assessed fees for their membership. The WCIRB works very closely compiling statistical records and generating reports. Records are maintained for each policy in the state of California including incurred losses, reserves, and claims expenditures. The insured is required to submit mandatory reports called "Unit Statistical Plan" that is published by the WCIRB as the California Worker's Compensation Uniform Statistical Reporting plan. It is updated on an annual basis and is public information that is available through the WCIRB in San Francisco.

NCCI

The counterpart to the WCIRB in most other states, the National Council on Compensation Insurance (NCCI) performs many of the same functions as the WCIRB.

IBNR: Incurred But Not Reported

- Estimated incurred but not reported reserves. Money that is set-aside by insurance companies for reserve anomalies.

California Workers' Compensation Uniform Statistical Reporting Plan

- An insurance company's financial ability to pay all open claims to conclusion is monitored through the reporting of claim file reserves under this plan. The report is done annually. Statistical data is then available that reveals average reserves for various types of claims.

Self-Insurer's Annual Report

- The reserves of self-insured employers are reported to the State via this report on an annual basis.

Author, Cyndi Koppany, is Director of Corporate Training for Cambridge Integrated Services Group, Inc. E-mail her at ckoppany@earthlink.net.