EMPLOYERS® Small Business Poll Finds Majority Have Little or No Knowledge of How Self-Insured Groups Work; Unaware of Failures and Assessments
posted on 06/28/2012
RENO, Nev. – June 28, 2012 – The majority of small businesses (73 percent) report they have little or no knowledge of how Self-Insured Groups (SIGs) work according to the recent Small Business Opinion Poll conducted by ORC International commissioned by EMPLOYERS®, America's small business insurance specialist®.
EMPLOYERS’ latest SIG-related poll results come at a time of continued financial challenges for some large SIGs and their members around the country. In California, a workers’ compensation SIG for restaurants, golf courses and country clubs recently announced a $42 million assessment on its member businesses to make up for the group’s insufficient reserves. The assessment means costs of tens of thousands of dollars or more to the member companies, including many that are former members. And recently a healthcare industry SIG also announced an assessment to its members which was necessary to comply with California financial standards and to shore up a $25 million reserve deficit.
Four out of ten small business decision-makers incorrectly believe that SIG members are not financially responsible for the claims of each of the group’s other member companies, according to the latest EMPLOYERS Small Business Opinion Poll. This lack of SIG knowledge is not limited to the general small business population. Thirty-nine percent of small businesses who are currently or were part of a SIG incorrectly believe SIG members are not financially responsible for the workers’ compensation claims of each of the other companies in their SIG, not just their own businesses.
EMPLOYERS Small Business Opinion Poll Snapshot:
73 percent have little or no knowledge of how SIGs work
40 percent of all small business decision-makers polled don’t realize SIG members are financially responsible for each of the other member company claims
39 percent of current and former SIG members don’t realize they are responsible for claims of each of the other member companies
31 percent believe saving money on annual premiums outweighs the financial risk of a SIG failure
25 percent incorrectly believe that their claim liability ceases when they leave a SIG
Selecting Workers' Compensation Coverage
When selecting a workers' compensation insurance carrier, price logically serves as a deciding factor and is certainly important. However, it's also important for businesses to consider long-term cost savings that can be achieved through value-added programs such as loss control, anti-fraud and managed care programs that are offered by private insurance carriers.
Following are questions businesses should ask if they are already members of or are considering leaving self-insured groups.
Nine Questions Businesses Should Ask Their Self-Insured Group Administrator:
How well funded is the self-insured group?
How many claims have occurred while my company has been a member?
What is the expected lifetime cost of each of these claims?
What does “joint and several liability” mean to my business?
What is my company’s exposure if another member of the self-insured group has a claim?
Can a claimant sue my company for the full cost of a claim?
What liabilities does my company have if I leave the self-insured group?
What are the legal requirements of leaving a self-insured group?
Will I need to reinsure any costs related to claims that occurred while I was part of the self-insured group?
About the Small Business Opinion Poll
The study commissioned by EMPLOYERS surveyed 501 owners or managers of small businesses with 1-99 full-time employees. Data was collected through telephone interviews during the period May 9 – May 17, 2012 at the 95 percent confidence level. The sample is stratified across business size and industry grouping, including manufacturing/construction, transportation/ communication, wholesale/retail, financial services, or personal/professional services businesses. The survey was conducted by ORC International through its Small Business CARAVAN.
About Employers Holdings, Inc.
Employers Holdings, Inc. (NYSE: EIG) is a holding company with subsidiaries that are specialty providers of workers' compensation insurance and services focused on select small businesses engaged in low-to-medium hazard industries. The company, through its subsidiaries, operates coast to coast. Insurance is offered by Employers Insurance Company of Nevada, Employers Compensation Insurance Company, Employers Preferred Insurance Company, and Employers Assurance Company, all rated A- (Excellent) by A.M. Best Company. Not all insurers do business in all jurisdictions. Additional information can be found at: www.employers.com.
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Media – Ty Vukelich, Vice President, Corporate Marketing,(775) 327-2677
Analysts – Vicki Erickson Mills, Vice President, Investor Relations, (775) 327-2794