Workers' compensation has been around in one form or another since Washington State passed the first coverage in 1911. Most of today's business owners are required by law to have coverage, excepting for those in Oklahoma and Texas where there is an "opt-out" clause which gives employers the option of providing protection on their own.
In most of the remaining states stock and mutual insurance companies write coverage for worker's compensation, although large and financially stable companies may be allowed to self-insure if they meet strident standards. Four states are covered by what is called monopolistic state funds, where the state alone provides workers' compensation policies.
Workers' compensation insurance is a diverse market as both required coverage as well as benefits is determined on a state level. Most markets use a standard classification and rating system to determine what coverage a business must purchase.
Some workers' compensation providers are specialists, meaning they insure in that sector alone. Other companies are multi-product providers and may offer a wide range of insurance products as well as compensation insurance.
While worker's compensation is regulated on a state level there are several national organizations used to regulate the market and rates. The National Association of Insurance Commissioners (NAIC) is the U.S. regulatory and standard-setting support organization created by the chief insurance regulators from the 50 states, five U.S. territories, and the District of Columbia. The National Council on Compensation Insurance (NCCI) is a data-gathering organization that provides recommendations based on the analysis of trends and other factors.
A Look at the Market
The market of workers' compensation insurance policies varies widely. Some insurance companies specialize in compensation, while others offer a wide range of insurance products. Some major carriers own separate companies for each type of insurance market. Still others focus on providing coverage for niche businesses, for example only offering coverage to schools.
Market rates are determined by a wide range of data. According to NCCI total net written premiums for private workers comp carriers was over $40 billion in 2017 so there are many factors involved in determining premium rates. Basically, your rates are based on expected losses. Your business will be classified by industry group and then a projection will be made based on your type of industry. For example, construction and mining both have a high incidence of worker's injuries so these types of industries automatically have a higher market rate. Businesses in low-hazard industries can expect lower rates.
Once you've been in business for a few years you'll also get an experience rating. This will reflect your own company's rate of on-the-job injury claims and is the reason you should constantly promote and teach safety to your employees. Zero or few workers' compensation claims will result in lower premiums once you have an experience rating.
Because workers' compensation laws and benefits are voted on by each state legislature annually your state market may fluctuate as changes in benefits occur. Insurance companies and organizations such as NCCI are constantly analyzing changes and data and your insurance company will be charged with informing you of any market changes that affect your policy and premiums.
Specialists in Workers' Compensation
As mentioned above, some companies specialize in workers' compensation insurance policies. In addition some major insurance corporation hold subsidiary companies that only write compensation policies. An example is Blue Cross Blue Shield of Michigan, which owns Accident Fund Group. Accident Fund Group in turn owns several subsidiary insurance companies which only sell workers' compensation insurance.
Some state insurance funds are considered workers' compensation specialists because that is their primary concern. Here are some examples of state insurers:
All of the above state insurers compete with private insurance companies in the market, and most cover their state's coverage to employers that cannot get insurance from other sources.
As the name suggests, multi product insurers offer a range of insurance policies to all sizes of businesses. For example, you might purchase your workers' compensation insurance as part of a package or multi-policy discount combined with liability insurance, health insurance, and property insurance in order to save on the final combined insurance amount.
Multi-product insurers may have better policy options by offering more discounts for specific items such as credit rating, multiple businesses, or multi-state policies. On the other hand because they have a wide range of products they may not be as savvy when it comes to your personal business needs and options.
Workers’ Compensation Insurance in Monopolistic States
There are four states considered monopolistic states in regards to workers' compensation insurance. In these states your only option is to purchase workers' compensation for your business from a state operated insurance fund. Purchasing a policy from a private insurer is prohibited, so the state in effect has a monopoly on workers' compensation policies. Here are the four monopolistic states:
If your business operates in more than one state you'll need a separate policy in these states. Each of these states also uses their own classification system, so a business moving from another state may find itself classified and rated differently than in the state of origin.
Workers' compensation in monopolistic states doesn't cover liability, so you'll need an additional policy such as employer's liability coverage.
The National Association of Insurance Commissioners (NAIC) was established in 1871 to assist states in regulating insurance. The NAIC is an advisory organization, meaning it provides regulatory advice and sets standards as well as developing model laws for state consideration. Model laws help states save time in regards to the insurance statutes as it facilitates standardization of regulations and laws nationwide.
The chief insurance regulators from all 50 states, five territories, and D.C. govern the NAIC and coordinate the organization's oversight. This standardizes state-based insurance throughout the nation.
One task of the NAIC is the Workers' Compensation (C) Task Force, which studies the effectiveness and nature of state workers' compensation regulation. This task force also covers a wide range of related issues such as:
The NAIC allows state insurance regulators to conduct peer reviews, establish standards and best practices, and coordinate their oversight of state workers' compensation laws.
The National Council on Compensation Insurance (NCCI) is not a regulatory agency, it is a not-for-profit organization that standardizes, computes, and consolidates the workers' compensation rates and premiums. Created by the insurance industry in 1923, the NCCI determines a wide range of industry rules such as industry classifications and payroll computations and exclusions.
The NCCI gathers data, analyzes trends, and does actuary computations within the industry in order to make the workers' compensation insurance system work smoothly.
The NCCI provides rating and other functions to insurers in thirty-six states. These states report their premiums and losses to the NCCI each year and the data is analyzed. Here are some of the other functions the NCCI performs:
Top Workers' Comp Carriers in 2021
If you're a business owner you already know workers' compensation is a big expense of doing business. This sector of the insurance industry is in itself a major business: in 2017 the top 25 insurance carriers wrote premiums worth a staggering $57.9 billion. The top 25 also accounted for almost 70 percent of the market share, with the top four carriers writing 23.47 percent of all workers' compensation policies.
The top 10 insurers for workers' compensation cornered 46 percent of the market nationwide, with the top three writing slightly over 18 percent of all policies. Here's a look at the top 10insurers according to the latest NAIC report:
|2.||Harford Fire & Casualty Group||3,406,849,487|
|3.||Zurich Insurance Group||2,923,427,279|
|4.||Amtrust NGH Group||42,920,200,671|
|5.||Berkshire Hathaway Group||2,802,215,913|
|6.||Chubb LTD Group||2,458,869,861|
|7.||Liberty Mutual Group||2,446,891,528|
|8.||State Insurance Fund||2,277,778,388|
|9.||American International Group (AIG)||1,758,580,865|
|10.||Old Republic Group||1,458,125,287|
- Accident Fund Insurance
- Accident Insurance Company
- ACUITY A Mutual Insurance Co.
- Amerisafe Insurance
- Amerisure Workers Compensation Insurance
- Atlas Workers Compensation Insurance
- Beacon Mutual Insurance
- Benchmark Insurance Company
- BerkleyNet Workers Compensation Insurance
- Builders Mutual
- Cimarron Insurance
- Dovetail Workers Compensation
- EMC Insurance
- Employers Insurance Company
- Encova Insurance
- Farmers Insurance
- Federated Insurance
- FrankCrum Insurance
- Great American Insurance
- GuideOne Workers' Compensation Coverage
- ICW Group Insurance
- Idaho State Insurance Fund
- Kentucky Employers Mutual Insurance
- Louisiana Workers' Comp Corp.
- Maine Employer's Mutual Insurance Company (MEMIC)
- Missouri Employers Mutual Workers Compensation
- Minnesota Workers Compensation Assigned Risk
- Nations Builders Insurance
- NCCI Workers' Compensation
- PMC Workers Compensation
- Previsor Workers Compensation Insurance
- Pride Risk Workers Compensation
- QBE Workers Compensation Insurance
- SFM Workers Compensation Insurance
- SouthEast Leasing Workers Compensation
- State Auto Insurance
- Get Workers Comp Quotes from Strategic Comp and More
- SUNZ Workers Compensation Insurance
- Texas Mutual Workers Compensation Insurance
- Trean Insurance Group
- Utah Business Insurance Company (UBIC)
- Wisconsin Compensation Rating Bureau (WCRB)
References and Resources
National Council on Compensation Insurance (NCCI)
The National Association of Insurance Commissioners (NAIC)
http://www.naic.org/Workers' Compensation (C) Task Force
Insurance Journal: Top 25 Workers’ Compensation Insurers