Self-Insurance Certification Services due to the rapid rise
in workers' compensation
premiums over the last few years,
self-insurance is becoming an increasingly popular and cost
effective way for organizations to manage their workers’
However, the "self-insuring" process can be difficult and
full of pitfalls. Because of this, it is very important
to have a company to work with your organization that is
familiar with these "pitfalls" and able to provide guidance
throughout the process.
Penser and its consultants have taken many organizations
through the self-insuring process, and are very aware
of what it takes to get companies through the "obstacle
Since each organization is different and has a unique set
of challenges in the certification process, Penser
tailor's its certification services according to an entities
specific needs. In general, however, we have found the following
step by step approach to be very effective in assisting
organizations through the process:
1) DETERMINE IF YOUR ORGANIZATION MEETS THE STATE'S MINIMUM
Below is a listing of the State of Washington’s Minimum Self-Insurance
Minimum $25,000,000 in total
- Meets states financial ratios
- At least 3 years in business in the State of Washington. Audited financial statements. The Department also likes to see profitability and has several financial ratios they look at to evaluate a company's financial health.
- Must demonstrate ability to
manage your Self-Insurance program - either through the
use of qualified third party administrator, or
- Must have surety bond or escrow
- Must have written, documented
- If a subsidiary, the parent
company must sign a financial guarantee
2) DETERMINE IF SELF-INSURANCE IS RIGHT FOR YOUR ORGANIZATION
- BENEFITS OF SI
Most Organizations explore self-insuring their workers’ compensation
exposure in an effort to reduce costs. This is a very valid
reason, but, to achieve and maintain a self-insurance program
that is cost effective takes a serious commitment to safety
and claims management by the organization. Self-Insurance requires
a long term commitment throughout the organization, from upper
management down to the line employees. Self-Insurance, once
obtained and committed to , can be very beneficial for both
the employer and the employees. Below are some of the benefits:
- Reduce Workers’ Compensation Costs
- More Efficient Claims Administration
- Increased Control in Claims Direction - "It’s Your
- Better Coordination of Medical, Vocational and legal
- Availability of Cost Containment Systems
- More Management involvement in Safety
- Customized Data Reporting Available.
- Risk can be limited by insurance coverages
- Cash Flow benefits from lower costs and extended payment
pattern of losses
- Employees no longer pay medical aid premium
- More timely benefits
- Improved communications for injured workers
- More effective medical and return to work management
To determine if self-insurance makes financial sense for your
organization, Penser can, at no cost and no obligation to you,
conduct a basic feasibility study of your program.
The self-insurance feasibility study compares the last several
years of your State Fund workers' compensation costs and premiums
to how you would have done if you had been self-insured for
that same period of time. We include estimates of the costs
associated with being a self-insured employer along with estimates
on the improved claims management efficiency you can expect
to gain as a self-insured employer.
The basic analysis can help quantify the savings you would have
had in the past, and can expect in the future if you become
self-insured. It can also help justify any costs that may be
necessary to become self-insured.
To conduct a self-insurance analysis, Penser simply needs to
obtain a signed "authorization to inspect form" from the employer.
This form allows Penser to request the necessary loss history,
risk class codes etc from the Department of Labor and Industries.
3) BASIC FEASIBILITY STUDY
When it comes to getting through the self-insurance certification
process, a failed safety program, is the most common cause for
employers to not be granted certification.
Due to this fact, Penser has partnered with Specialty Safety
Services and it’s President, Gordon Coffey to provide employers
with the most experienced and qualified safety certification
consultant in the State. Gordon is very experienced at preparing
employers for their certification safety evaluation, and has
assisted more employers through the certification process than
any other safety consultant.
The first step in preparing for a safety audit is to obtain
a baseline of the employer’s written and physical safety program.
As part of Penser’s certification service program, Gordon will
come out to your location, review your written program and do
a walkthrough of your locations. After assessing the strengths
of your program, and the areas he feels need improvement, Gordon
will provide a report outlining what he feels needs to be done
prior to the certification safety audit. In conjunction with
his report of findings, Gordon will provide a price quote for
the services he feels will be necessary to give the employer
the best preparation to pass the certification audit.
4) SAFETY PROGRAM INITIAL EVALUATION
Prior to getting too far into the self-insurance certification
process, Penser will obtain a preliminary opinion from the Department
of Labor & Industries certification manager regarding an organizations
financial position, history and structure. The Department will
want to see the financial statements audited.
By doing this, we can determine the best way to fill out the
application, and also get a reading on how the Department will
view a companies financial position and ratios. If there is
a problem in this area, it is best to know right away in order
to avoid unnecessary costs.
5) PRELIMINARY REVIEW OF FINANCIAL STATEMENTS
Once the above steps have been taken, and it has been determined
that an organization wants to proceed towards self-insurance,
the next step is to implement the plans of action necessary
to improve on any areas of weakness that were identified (e.g.
improving written safety program, get financials audited, etc.).
The implementation plan must take into consideration the following
Application and Evaluation Process-Time Frames:
6) TIME FRAMES / IMPLEMENTATION / APPLICATION
- Applications are submitted on natural quarters ( e.g.
1/1, 4/1, 7/1 10/1) for certification on the subsequent
- One page application form completed
- Copy of written safety program
- Three years financial statement (most recent audited)
- $250 check payable to Department of Labor and Industries
for filing fee
- L & I safety inspector evaluates safety program (usually
30-60 days after application filing) at identified locations,
- Self-Insurance Certification Department completes financial
- L & I committee meets 30 days prior to quarter to approve
or disapprove applicants
- Companies can pull application for later consideration
(usually 90 days)
- If the company fails the safety evaluation, they generally
must wait 6 months for reconsideration
Approximately 30 days prior to the quarter, L & I will issue
letters to all applicants. The letters will either indicate
that the organization has been denied, (and they will provide
the reason (s) why), or that the organization has been accepted
contingent on providing the required surety bond documentation.
During the last 30 days prior to self-insurance beginning it
is very important to get all of the self-insurance claims management
functions and programs in place.
Penser works with the employer to make sure all elements of
the program are in place and functional prior to beginning self-insurance.
Below are a few of the key components Penser can assist with:
7) CERTIFICATION APPROVAL
- Excess Insurance/ Surety Placement
- Banking arrangements
- "Injury Packet"
- Light duty program
- Supervisor training
- Managed Care
To obtain more information about self-insurance, and our
self-insurance certification services please contact a
Penser representative at
email@example.com or call Phil at
360/455-4128 x103 .