At the 2019 California Self-Insurer Association Annual Conference, a panel discussed ways to maximize the partnership with your excess carriers. The speakers were:
- Cathey Jackson – Director Workers’ Compensation, Albertson’s
- Jennifer Nicholson – Senior Director Corporate Claims, Keenan
- Debra Russell – Senior Director, Strategic Initiatives, Workers’ Compensation Program, Schools Insurance Authority
EDITORS NOTE: The content of this blog is based on comments from the panelists for this session. They do not necessarily reflect the opinions of Safety National who publishes the Conference Chronicles blog.
Before a Claim Occurs
Know your policy. Each policy has their own language. Do not assume they are the same. Policies can have different reporting requirements, exclusions and other provisions. Different years can have different policies, even if the carrier was the same. Pay special attention to words and phrases in quotations as those are likely defined in the policy. There could also be state-specific provisions in the policy. Most excess policies provide “statutory” coverage meaning it covers anything provided under the workers’ compensation statutes. However, some policies do have dollar-specific limits.
Set up the partnership before there are any claims. Know who your contacts are at the excess carrier. Use your excess carrier as a resource on complex claims. Make sure your TPA/self-administered team is aware of your excess carrier especially their reporting requirements.
If you are involved in a merger/acquisition situation make sure you review their policies too. Old actuarial reports can be a good source for details on who provided coverage on the older policy periods.
Keep in mind that excess policies in California are considered contracts and are thus subject to interpretation by the courts. In California there is a case (Bart) where the courts ruled the excess carrier was not bound by a ruling of the WCAB because they were not a party to the litigation.
Most claims breach the self insured retention over time rather than being catastrophic injury claims where excess exposure is apparently immediately. In such claims, it is important to make sure you are reserving claims timely and appropriately so that you are also appropriately putting the excess carrier on notice.
If there is a dispute over coverage, work with the excess carrier on getting a consent agreement so that you can resolve the underlying claim while still preserving the coverage dispute. That mitigates the underlying loss exposure which benefits everyone involved. This is usually done under a “reservation of rights” with both the carrier and insured reserving their rights with regard to the coverage litigation.
Watch out for “master files” where an employer is handling multiple claims off a single master file rather than separate files for each occurrence. Excess policies are on an “occurrence” basis so the carrier will require the employer to separate the costs of the different accidents to different files. Usually you can use an AME to assist in determining the apportionment between the files.
If you change claims administrators, you must transfer the documentation from those prior administrators to the new administrators. When you put the excess carrier on notice, they will want to see the full history. This is especially true of the payment history. If you do not keep the payment detail from prior TPAs, the excess carrier will likely not reimburse because that detail is lacking.
One of the big challenges with Cumulative Trauma (CT) claims California is determining the correct accident date for coverage under the excess policy. The Statutes in California define proper exposure periods for CT claims. Keep in mind that if the date of loss under the statute is the date of last injurious exposure, multiple excess carriers could be involved in the claim. There is case law where the parties stipulated to a date of accident that was contrary to the statutory definition and the courts ruled the excess carrier was not bound by that stipulation (Bart). Some policies may specifically outline how the accident date is defined with cumulative trauma claims.
Settlement of Claims
If a settlement could cause the claim to breach the self-insured retention (SIR) get the carrier involved early in the discussions. You will need consent from the excess carrier for settlement involving their funds. Be aware of any settlement requirements your excess carrier may have including the use of structured settlements and MSA submission requirements.
Once the settlement has been reached and funds paid, make sure you collect funds from the excess carrier before closing your file. Watch out for the TPA not submitting the reimbursement request timely and consider making this a requirement in the TPA contract.