By Scott Bogdan

Greetings – I am writing my first Blog and am so excited to be bringing to you insights and thoughts on all things self-insurance related and beyond. Did you know, in PA alone:

  • There are 897 employers and 16 groups that self-Insure their Workers’ Comp programs

Many believe the world of self-insurance is complex and too risky, when in fact, if structured the proper way to meet your individual risk tolerances, self-Insuring can be exactly what the doctor ordered. And yes, there are some critical steps that must be taken to be approved in PA to self-insure your WC program. But, once some of the heavy lifting is done upfront, you will reap the rewards for years to come. Some of the critical steps that are required include:

  • Determining your Self-Insurance Retention (SIR) level (how much of each loss will you pay out of your own pocket)
  • Getting Excess Insurance Coverage above that SIR level (this is actually insurance above a certain level of each loss that you will be covered for in the event of a very large loss – Typically $500,000 and above)
  • Posting some type of collateral in the form of a Letter of Credit (from the bank), a Bond or posting Cash (more then what you stashed under your mattress) in an amount determined by the Commonwealth (Based on the size of your organization and your prior losses) This is to assure you have enough money stashed away to pay for losses in the event your company goes belly up.
  • Assessments – Yes Yes, we all must buck up just as insurance carriers do each year to help support the Funds that help run the Commonwealth’s programs…ie… All of these funds are for the good of the Commonwealth and to protect the little guy(injured worker) in the event something goes wrong.
  • Safety First…. You will also be required to show proof that you are keeping your employees safe through the form of an Accident and Illness Prevention Program (AIPP) that will need to pass the mustard with the Commonwealth’s auditors. And in case you missed it, here is the link to a seminar I recently hosted with the AIPP Auditors on how to prepare for an Audit of your AIPP program. In 2022 they conducted 43 audits and are moving full steam ahead in 2023 with more….
  • TPA or no TPA…. Unless you are enormous and want to hire your own team of Claims Adjusters (not recommended for most self-insureds due to the complexity of the systems required to pay claims in compliance with all statutes and laws), you will need to outsource the claim handling to a suitable Third-Party Administrator (TPA) that will investigate and pay claims on your behalf.
  • Ongoing oversight of the program and establishing goals and achievements you want to see come out of it… Self-Insurance Consultants… i.e. “The Self Insurance Guy” can help.

And a big welcome to Matthew W. Slater, Esquire, who’s recently taken the reins as Chief of the Self-Insurance Division. Exciting times ahead, Matthew!

Fun Fact: Remember the buzz about protecting the aging workforce? Well, times have changed. Surprisingly, most injuries now come from the 25-29 age group, a whopping 11.3% of all reported injuries in 2022. The landscape’s shifting, my friends.

Until next time, Be Well!

Bonus Content: EHD recently co-hosted a webinar all about the AIPP Audit Process, check out the recording here: https://vimeo.com/user114980215/aipp2023?share=copy