Self insured employers buy excess insurance. Is excess reinsurance an option?

1. EXCESS INSURANCE VS. REINSURANCE
FOR WORKERS’ COMPENSATION SELF INSURANCE
EXCESS INSURANCE REINSURANCE
Excess insurance is an admitted
insurance product.
Reinsurance is insurance purchased
from one insurance company by
another insurance company.
Reinsurance rates and forms are not
filed with the state insurance
department.
Reinsurance is not standardized.
Each contract is individually
negotiated.
Reinsurance may have more
exclusions than excess insurance
(e.g. Terrorism).
Reinsurance provides coverage for
catastrophic losses. Reinsurance can
also provide protection within the
retention of an excess policy.
A reinsurance contract has a fixed
limit - meaning the amounts paid for
an injured worker could exceed the
amount of the policy limit.
Reinsurance is not covered by any
guaranty funds in the event of the
reinsurer’s insolvency.
Reinsurers are more willing to
underwrite heterogeneous risks, as well
as more hazardous risks.
If an employer, or group of employers is
not classified as an “insured” under the
state regulations, they are prohibited
from buying reinsurance.
The excess insurer files rates and
forms with the state insurance
department.
Excess insurance usually provides
“statutory” limits – meaning all payments
made under the Workers’ Compensation
requirements, without limit.
Excess insurance protects the
self-insured entity from catastrophic
losses.
Excess insurers are covered under the
states’ guaranty fund which will pay
claims on behalf of insolvent insurers.
Excess insurers prefer writing policies
for homogeneous risks.
Excess insurance is a standardized
product.
Excess insurance provides broad
coverage.
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