About three years ago, Bruce Burroughs got a call from fellow dairy producer Bobby Kelly. Kelly, who operates a dairy on the west side of California’s Central Valley, asked Burroughs if he wanted to participate in a self-insured workers’ compensation insurance group.
Burroughs, of Denair, Calif., wasn’t happy with the existing workers’ compensation policy he had purchased through the state. Service was marginal, at best. So, he gave Kelly’s offer some serious thought and jumped in. Today, he can’t be more pleased with his decision. It gives him affordable coverage, and should he need it, protection against lawsuits filed by injured employees.
A self-insured group plan is an alternative to conventional private or individual workers’ compensation policies. Here is how Burroughs’ group insurance works and some tips for enrolling in one yourself.
The group Burroughs joined is specific to livestock owners. It is called the “California Livestock Producers Self-Insurance Group.”
In its first year, seven members made up its ranks. Today, the group has grown to nearly 100 members, mostly through word-of-mouth, and is still actively recruiting others, Burroughs says. Dairy producers make up 95 percent of the membership. A few poultry, beef and horse operations also joined.
In order to join, participants must have a good safety record or demonstrate safety consciousness, Burroughs says.
Choose an administrator
Work with a trusted administrator, Burroughs says.
The workers’ compensation policy that he uses is administered by Self Insured Solutions of Las Vegas, Nev. He pays premiums monthly. Those who wish to join the group receive a rate quote based on their previous safety record and claims history. Luckily, a history of extremely low claims has kept premiums affordable for the group. So far, there have been no rate increases, except to one member who experienced a rate increase because of three major accidents on-farm.
After five years with the program, and a good safety record, rates could go down substantially. Members could see a rate reduction of 5 percent to 10 percent. “It’s incentive to keep injuries as low as possible,” Burroughs says.
Since it’s a self-insured program, money from a rate reduction would go back to its members.
Seek legal counsel
Workers’ compensation laws vary from state to state, so you might consider consulting with an attorney who is well-versed on workers’ compensation policies. An attorney can help you identify all the legal issues up front and make sure the program you are considering complies with the laws in your state.
Also be sure to check with your state insurance department to find out if you need approval to join or establish a self-insured workers’ compensation insurance group, says Anthony Raimondo, a labor attorney with McCormick, Barstow, Sheppard Wayte & Carruth in Fresno, Calif. Raimondo is the exclusive group legal provider on labor and employment for Western United Dairymen.
Raimondo suggests you ask these questions before you apply for a group policy:
- Does the program have sufficient funds to cover potential losses?
- Is the infrastructure in place to handle claims properly?
- Does the program have a contract in place with an experienced workers’ compensation defense counsel should the need for legal representation arise?
- Does each member contribute sufficiently to the plan so that it is fluid enough to cover claims?
- Does each member actively follow a safety program to help limit injuries and control the cost of claims?
Raimondo puts particular emphasis on the last point. It is the cornerstone to the success of any group workers’ compensation policy. Burroughs agrees. Safety practices that result in less injury and fewer claims have kept his rates down. “We have a lot more control over our own destiny,” he adds.