Self-Insurance Costs
We have described the usual fixed and variable costs below as well as displayed them in Figure 3. Remember these are examples of costs typically found in self-insured programs. Your actual costs will vary depending on your individual experience, your state, and other factors.
Fixed Costs
State application or filing fees: these will vary from $100 to over $1,000.
Self-insurance bond: $15 to $45 per $1,000 of bond amount.
Letter of Credit: 1% to 2% of amount of LOC. (each state requires a bond or LOC as assurance that funds will be available to pay future claims).
Claims administration and loss control: 8% to 13% of standard workers' compensation premium (often charged "per claim").
Excess Insurance: 9% to 13% of standard workers' compensation premium (combined specific and aggregate coverage).
Variable Costs
Claims: Paid as necessary. A qualified broker or insurance consultant can help you project estimated future claim costs based on your past experience.
State taxes and assessments: These also may vary by state, but are usually 1% to 4% of either incurred or paid losses or manual workers' compensation premium. In some states these are a set amount and would be in the "fixed cost" category.
