3 Benefits of a Monoline Worker’s Compensation Insurance Policy
September 17, 2020There are a lot of vocab words within the insurance industry that may have the tendency to make the conversation around insurance buying seem to be more complicated. Monoline Worker’s Compensation Insurance is one of those terms. However, when you break it down, all that “Monoline” means is that the policy is sold by itself, or stand-alone, rather than as part of a commercial package policy or alongside a Business Owner Policy (BOP).
In fact, there are insurance companies who specialize in only writing Worker’s Compensation Policies. In other cases, insurance companies who offer other types of insurance may be willing to write a Worker’s Compensation Policy without “supporting business”, such as a Commercial Property Policy, but these instances are much more uncommon.
If you need Worker’s Compensation Insurance, the best bet is to first check with the insurance company who writes the rest of your coverage. If this is not an option, then you may need to look at obtaining a Monoline Worker’s Compensation Policy. Having this option at your disposal has its benefits. Here are a few benefits of choosing a Monoline Worker’s Compensation Insurance Policy and a few situations where this option may save the day:
1. You Can Get Coverage Even if You Have Recent Claims or a High Experience Modification Factor (E-Mod)
If you have recent claims on your Worker’s Compensation Insurance Policy, or you’ve had some bad loss experience over the past 3 years which has negatively affected your E-Mod factor, a monoline worker’s compensation policy may still be a viable option. Some Monoline Worker’s Compensation Insurance carriers specialize in distressed accounts. In other words, they work with accounts with high debit E-Mods, shock losses, or claim frequency issues.
These types of accounts are typically ineligible for standard carrier WC insurance products because they are often looked at as being adverse risk exposures. Oftentimes, past performance can be indicative of future results, and underwriters will often steer clear of an account that has some “hair” on it.
Companies that specialize in writing monoline worker’s compensation have incredibly fine-tuned actuarial calculations to help them determine the profitability of a classification of business that they want to write. They usually have taken the time to research the industries for which they write worker’s compensation and understand the loss control mechanisms that need to be put in place in order to mitigate the potential for future losses.
In short, these Monoline Worker’s Compensation carriers are often more specialized in their product offering and are better equipped to take a calculated risk by writing comp coverage for a distressed account. If the company can help the insured institute loss control measures, they can curb future losses and actually receive a higher premium payment for writing the account because of a debit experience modification factor, which is distributed by the state Workers Comp Bureau, and results in a policy surcharge due to prior claims.
In this way, monoline worker’s compensation insurance carriers are often able to take on accounts that other generalist insurance carriers would typically lose money writing and turn them into profitable clientele.
2. You Can Get Coverage if You Have an Unusual Type of Business or One That Poses a Higher Risk to Employees
In the same way that monoline Worker’s Compensation Insurance carriers may be willing to look at an account that has claims or a high E-Mod, many of these companies also specialize in writing WC policies for businesses that are a bit outside of the box.
Many standard insurance carriers will have a limited scope of the types of industries that they will write Worker’s Comp coverage within. These are often industries that present a lower risk of injury to workers. Or, some carriers may limit the type of businesses to which they will offer WC coverage even within the same industry.
For instance, a regional mutual insurance carrier may have a great Worker’s Compensation program for artisan contractors, but roofing contractors may be ineligible for coverage, which can cause the underwriter to decline to offer a quote. The same might apply to a company who is willing to write a Worker’s Compensation policy for a landscape contractor, but may decline to offer a quote to a landscape contractor who conducts tree trimming services.
Monoline Worker’s Compensation carriers may often develop specific programs for these types of businesses and higher risk industries. They often specialize in these types of higher-risk accounts and the underwriters’ expertise in the industry allows them to differentiate the fine line between “good” risks and “bad” ones.
Given their additional expertise, and the company’s industry-specific programs, Monoline Worker’s Compensation Policies are often the best place to obtain coverage for businesses that have employees engaged in higher-risk occupational duties.
3. In Certain Situations, a Monoline Worker’s Compensation Policy Can Save Money
It is very situation-specific, and the ability to save money on any of your insurance policy premiums really is a case-by-case scenario. There are many factors affecting worker’s compensation premiums. But, because it’s a case-by-case basis, it is important to understand that a Monoline Worker’s Compensation policy is not automatically cheaper than a policy written in conjunction with a Commercial Package Policy (CPP) or a Business Owner Policy (BOP) product.
However, there are some cases where the rates you may be able to receive from a Monoline WC carrier are indeed lower than that of a standard carrier. What is almost always true is that the price with a Monoline Worker’s Compensation Insurance company will beat that of a State Worker’s Insurance Fund about 99.99% of the time. If you have had to go to a State Fund because it was the only place you could obtain coverage in the past, looking to a viable Monoline Worker’s Compensation Insurance option is a good way to save your business some money each year.
These are just a few benefits of choosing a Monoline Worker’s Compensation Insurance Policy. Knowing the basics of Worker’s Compensation is helpful, but it can still be a complicated insurance product to navigate. Be sure to involve an experienced independent agent who has access to national markets when you are searching for Worker’s Compensation Insurance for your business.
Their knowledge, expertise, and carrier options will help you to get the right coverage for your business at the best value possible. If you would like to discuss the Worker’s Compensation Insurance options available for your business, give one of our Commercial Lines agents a call at 1-800-537-6880 or 717-665-2283!
Disclaimer: Information and claims presented in this content are meant for informative, illustrative purposes and should not be considered legally binding.