I have a client that does work in asphalt plants and quarries, and their claims history is atrocious, to put it midly. This past renewal, everybody took a pass on their workers comp and we wound up having to place them SWIF, and was that a rude awakening.
I was not aware that SWIF places accounts over $40,000 in a retrospective rating plan, which is sort of like a dividend plan except they can also increase the premium after the term ends if your claims experience is poor.
Currently, they're at a $60,000 premium, but if this year's loss ratio exceeds 40%, they will be retroactively charged more. In a worst-case scenario, where their loss ratio exceeds 180%, they will be charged an additional $100,000, which would probably put them out of business.
Has anybody dealt with this before? My initial thought was that a good portion of their work does occur outside of PA in contiguous states. If we set up policies in those states, and if enough payroll is legitimately allocated in those states that the PA exposure can be reduced to the point that the SWIF premium falls under $40k, has anybody ever seen them back out of a retrospective plan mid-term? My other thought was trying to negotiate some kind of deal where we increased the scheduled debit and/or modified the retrospective plan so there is no possibility of credit at the end of the year (right now they could get $25,000 returned if they have $0 in claims) in hopes of decreasing the potential end cost of the worst-case scenario.
Does anybody have any experience with this? Any input or suggestions would be much appreciated.
I was not aware that SWIF places accounts over $40,000 in a retrospective rating plan, which is sort of like a dividend plan except they can also increase the premium after the term ends if your claims experience is poor.
Currently, they're at a $60,000 premium, but if this year's loss ratio exceeds 40%, they will be retroactively charged more. In a worst-case scenario, where their loss ratio exceeds 180%, they will be charged an additional $100,000, which would probably put them out of business.
Has anybody dealt with this before? My initial thought was that a good portion of their work does occur outside of PA in contiguous states. If we set up policies in those states, and if enough payroll is legitimately allocated in those states that the PA exposure can be reduced to the point that the SWIF premium falls under $40k, has anybody ever seen them back out of a retrospective plan mid-term? My other thought was trying to negotiate some kind of deal where we increased the scheduled debit and/or modified the retrospective plan so there is no possibility of credit at the end of the year (right now they could get $25,000 returned if they have $0 in claims) in hopes of decreasing the potential end cost of the worst-case scenario.
Does anybody have any experience with this? Any input or suggestions would be much appreciated.
