Workers Compensation 5 Key Issues 1 Insurance Community

Workers’ Compensation 5 Key Issues 1 Insurance Community University

Welcome to your Insurance Community University Audio • All of you are currently on mute – Un-mute your own system – Telephone Option • Select Telephone on your screen • Dial in the PIN number so that your number becomes active – Microphone and/or Speaker Option • You can use this option if you have a headset that you use with your computer Insurance Community University 2

Participation & Chat Window • You will receive information from the monitor via the ‘Chat’ window. – Please locate window in the control panel • Q & A is welcomed during the presentation and at the end of the presentation • You will find the question box on your control panel – Write your question in that box and send it to the presenter/organizer • The presenter will take those • questions in the order submitted Insurance Community University 3

DOI Requirements • When you see a slide with the hand up symbol, touch the “hand” icon on your control panel – Click ONCE only • If you do not raise your hand, the monitor will be in contact with you in the chat box • If you are in a group, the designated proctor is responsible to make certain you are all in attendance at all times = Hand is down Insurance Community University 4

Polling • Throughout the class we will be conducting periodic polls • We need 100% participation on the polls • The polls are intended to check participation but also to create discussion topics throughout the presentation Insurance Community University 5

Forms To Complete for CE • After class ends – Return attendance form – Proctors – return your form to email address • Email address is in chat window or in email sent to you today Insurance Community University 6

DOI Requirements • We will file your hours with the DOI after the completion of this webinar and we have received the attendance form. • You have 48 hours to return the form • You will be sent a Certificate of Attendance/Completion by email. Please retain this for your records for five years. Insurance Community University 7

Internet Disruption • If the presenter looses internet connection STAY ON THE LINE • The administrators will communicate with you Insurance Community University

Internet Failure • If the internet fails and all participants are kicked off line by Go To Training or other source then the seminar will be terminated • You will receive instructions by email as to how we will proceed • This is a precautionary notice, only Insurance Community University 9

Disclaimer Insurance forms and endorsements vary based on insurance company; changes in edition dates; regulations; court decisions; and state jurisdiction. The instructional materials provided by The Insurance Community Center and its authors is intended as a general guideline and any interpretations provided by The Community do not modify or revise insurance policy language. • Information which is copyrighted and proprietary to Insurance Services Office, Inc. (“ISO Material”) is included in this publication. Use of the ISO Material is limited to ISO Participating Insurers and their Authorized Representatives. Use by ISO Participating Insurers is limited to use in those jurisdictions for which the insurer has an appropriate participation with ISO. Use of the ISO Material by Authorized Representatives is limited to use solely on behalf of one or more ISO Participating Insurers. • The authors of these materials and The Insurance Community Center assumes neither liability nor responsibility to any person or business with respect to any loss that is alleged to be caused directly or indirectly as a result of the instructional materials provided. www. theinsurancecommunity. com Copyright 2010 All Rights Reserved Insurance Community University 10

Disclaimer Insurance forms and endorsements vary based on insurance company; changes in edition dates; regulations; court decisions; and state jurisdiction. This instructional materials provided by Insight is intended as a general guideline and any interpretations provided by Insight do not modify or revise insurance policy language. The authors of these materials, Insight Insurance Consultants is a division of Insight Consulting and Management Inc. In providing these materials, Insight assumes neither liability nor responsibility to any person or business with respect to any loss that is alleged to be caused directly or indirectly as a result of the instructional materials provided. Copyright 2010 – 2011 All Rights Reserved www. insurancecommunitycenter. com Laurie: 714. 803. 5830 laurie@insurancecommunitycenter. com Marjorie: 714. 206. 9583 Marjorie@insurancecommunitycenter. com Insurance Community University 11

Your Instructor Today Casey Roberts, ACSR, AFIS, CIC Laurus Insurance Consulting 707. 477. 0913 Casey@laurusinsuranceconsulting. com www. laurusinsuranceconsulting. com Insurance Community University 12

What This Course Will Cover • Independent contractors, leased and temporary employees • Locations: employer, work sites, hire, residency • Third party action over claims and coverage • Government contracts • Foreign Workers’ Compensation Insurance Community University 13

Workers’ Compensation Overview Required coverage Often straightforward Unique exposures must be addressed Insurance Community University 14

Workers’ Compensation Overview Most states are compulsory Covers employees • Full or part time • Lawfully employed or not • Texas is elective • Employers subject to the law must provide benefits according to the statute Insurance Community University 15

Monopolistic States Must purchase statutory coverage through state • Cannot extend policies in other states • North Dakota, Ohio, Washington, Wyoming and Puerto Rico, U. S. Virgin Islands • Add Stop-Gap coverage according to state requirements • WC policy or CGL • Include as underlyer on Umbrella/Excess Insurance Community University 16

Leased, Temporary Employees and Independent Contractors Insurance Community University 17

The Act Leased employees • State statutes vary on requirements for PEO and Client to insure Temporary employees • Temp company is direct (general) employer • Client can be deemed special employer Obtain evidence of coverage Insurance Community University • Often overlooked 18

Employee v. Independent Contractor Avoidance of WC Innocent misclassification Penalties can be severe Insurance Community University 19

Employee Definition • An employee is a (natural) person who works in the service of another person under an express or implied contract of hire, under which the employer has the right to control the details of work performance – Black's Law Dictionary Insurance Community University 20

IC Definition • A person or organization hired to perform services under an express or implied contract – NOT subject to hiring party’s control or manner and means of performing the services Insurance Community University 21

IRS Guidelines for IC Status Previously used a 20 -point test • Changed in 2010 Now uses three broad areas of criteria Insurance Community University 22

IRS Guidelines for IC (Hired Party) Behavior control What when and how work is performed Financial control How and when payment is made Makes their own profit/loss Relationship to hiring party Contract Benefits Insurance Community University Definite time period for work 23

Worker’s Compensation Control IC provides evidence of current WC coverage If sole proprietor, include statement regarding WC status in contract Insurance Community University 24

Polling Question #1 25 Insurance Community University

Locations: Employer, Work Sites, Hire, Residency Insurance Community University 26

Polling Question #2 27 Insurance Community University

Multi-state Exposures Benefits typically follow employees temporarily working in other states or countries A state can allow benefits to apply to non-residents Insurance Community University 28

Multi-state Exposures Employees can often select state from which to receive benefits State of hire State of residence State of pay Insurance Community University State of injury 29

Part 3 A – Workers’ Compensation • List all states in which insured has operations known or expected • If the exposure is known or expected, it is intended that such state should be listed on the information page • Activates Compensation Laws for those states Insurance Community University 30

Part 3 C – Other States Insurance • Allows state benefits to apply in all states allowed by law and not named in 3 A – Intended only for the unexpected exposure. • Work in progress as of inception date will NOT be covered under 3 C – MUST be listed in 3 A Insurance Community University 31

Part 3 C – Other States Insurance • Use broad language under 3 C “All states except monopolistic states and states designated in 3 A. ” • Without this language – domicile state benefits apply – May be lower than state of injury – Employer will be liable for the difference – Coverage through State Compensation funds extend state benefits only Insurance Community University 32

Polling Question #3 33 Insurance Community University

Coverage Examples Insurance Community University 34

Employee Hired in State #1 Works in State #2 State #1 Listed in WC Policy 3 A #2 Listed in 3 A Either state benefits apply #2 Not Listed in 3 A / Other States Language in 3 C Work started after inception Insurance Community University Either state benefits apply 35

Employee Hired State #1 #1 Listed in 3 A / #2 Not Listed in 3 A 3 C Other States Language Not Included Job started in #2 after inception Employee may file in #1 or #2 and receive benefits allowed in that state Policy pays benefits from #1 If less than those in #2 – the employer will pay the difference Insurance Community University 36

State #2 Not Listed in WC Policy 3 A Other States Language Irrelevant Employee Hired in #2 Before Inception Job In Progress at Inception Employee injured in #2 No coverage Insurance Community University 37

Polling Question #4 38 Insurance Community University

Third Party Action Over Claims And Coverage Insurance Community University 39

Third party over or Action-Over Indemnity Employee has claim against 3 rd party Third party tries to recover all or part of the claim from the employer under indemnity or legal theory Insurance Community University 40

Example Employee injured while operating a table saw and sues the saw manufacturer The manufacturer sues the employer claiming employer was negligent in training and supervision and not product liability Insurance Community University 41

Example Injured Sub-contractor employee sues General Contractor failure to maintain safe premises GC files cross-complaint against Sub for failure to provide proper supervision • If Sub agreed to indemnify by contract – coverage applies under CGL • No contract – coverage applies under Employer’s Liability Insurance Community University 42

Polling Question #5 43 Insurance Community University

Government Contracts Insurance Community University 44

Government Contracts Many companies are entering into business relationships with the US Government Some of those contracts involve projects in other countries • Defense Base Act coverage is mandatory Insurance Community University 45

Defense Base Act Background • Passed by US Congress in 1941 • Primary goal – Cover workers on military bases outside the United States • Today, after several amendments now includes all public works contracts – Any military installation outside the US – Anywhere outside the US Insurance Community University 46

Defense Base Act Background • DBA coverage required for any employee, regardless of their nationality or home country • Local nationals or third country nationals are covered under the DBA Insurance Community University 47

Defense Base Act Overview • Penalties for failure to provide DBA are severe • Failure to procure DBA coverage exposes employers to penalties – Employers are subject to common law suits – No coverage applies – No common law defenses – No need to prove negligence – Claimants or theirs need only file suit and do not have to prove negligence – Suits are brought in Federal Court Insurance Community University 48

DBA Doctrines • The Zone of Special Danger doctrine – Employee’s injury or death arises out of or in the course of employment – The injury takes place in a location where circumstances of employment place the employee in a zone of danger – Injury need to be strictly related to specific job duties Insurance Community University 49

DBA Doctrines • The Reasonable Recreation doctrine – Employee’s injury arises out of or in the course of the employer’s furnished, funded or promoted recreational activities – Includes some non-sponsored activities Insurance Community University 50

Coverage • • • Full medical care Weekly benefits - % of salary Re-employment, when possible Education benefits Scheduled benefits Lifetime benefits for lost earnings or earning capacity on non-scheduled injuries Insurance Community University 51

Coverage • A D & D coverage – 24/7 most employees – $50, 000 U. S. nationals – $25, 000 third country nationals – $2, 500 local nationals – Some insurers will increase Insurance Community University 52

Who Writes DBA • Long list of authorized insurers • Majority written through – Ace Marine – Chartis – CNA Insurance Community University 53

Polling Question #6 54 Insurance Community University

Foreign Workers’ Compensation Insurance Community University 55

Foreign Voluntary Workers’ Compensation • “Standard” WC coverage extends to extra-territorial workers • May be inadequate to coverage additional risk – Disease – Foreign nationals – Repatriation • FVWC provides additional coverage Insurance Community University 56

Foreign Voluntary Workers’ Compensation Policy usually specifies the jurisdictional law that will apply Typically includes repatriation costs and endemic disease Covers U. S. employees while abroad on work, temporarily or permanently Insurance Community University 57

Foreign Voluntary Workers’ Compensation Coverage Covered repatriation expenses Covered endemic disease expenses • Costs to return employee to the US for medical treatment • Return of employee’s body for funeral • Medical costs due to disease that is endemic to that country Insurance Community University 58

Standardized Solutions • Foreign Coverage Endorsement, WC 48 06 03 11 87 – Covers a person hired in the U. S. Working temporarily in a foreign country – Covers BI by accident or disease, including any endemic disease – War, invasion, and hostilities-caused injuries not covered Insurance Community University 59

Standardized Solutions • Form WC 48 06 03 22 87 – Lists the employees to be covered and which state's benefits are to apply to them – Pays the benefits for the listed state to an employee injured in a foreign country Insurance Community University 60

Standardized Solutions • Excess Repatriation Expenses, Form WC 48 06 03 – Covers the difference between transporting a person under medical care and the normal expenses to have the person travel back to the U. S. Insurance Community University 61

Policy Provisions • Extend coverage to include “Travel Assistance” – employees and dependents • Include coverage for “foreign nationals” – working for the insured – working outside their country of origin • Include Employers Liability – some jurisdictions require this coverage is placed locally Insurance Community University 62

Foreign Admitted WC • Many countries require compulsory WC coverage – FVWC does not substitute • Admitted v. Non-admitted – Check with international underwriting desk to determine which is required by each country of exposure • Can be written stand-alone or with an international package policy Insurance Community University 63

Summary • Although the majority of your clients will need standard solutions, some will need extra attention • These situations can occur with small, medium or large accounts – Always ask your client about their business objectives and risks for the upcoming year Insurance Community University 64

References and Resources • NCCI – National Council on Compensation – See Silverplume / Sage to Access • WCIRB www. wcirbonline. com • U. S. Chamber of Commerce (202) 463 -5381 – 2009 Analysis of Workers Compensation Laws • The Workers Compensation Guide – See Silverplume / Sage • International Risk Management Institute www. irmi. com 1 -800 -827 -4242 • Your bureau manual – WCIRB, NCCI or others Insurance Community University 65

Upcoming Classes Upcoming University/Paid CE FREE to University Members Classes $50. 00/charge for non university members 5/23 Construction Liability 6/6 and 6/7 Ethics 6/11 Family Medical Leave Act Upcoming Community Classes FREE to University Members $25. 00/charge for non university members 5/16 Revise your Contracts or Risk Losing Additional Insured Coverage! Join the University TODAY. www. insurancecommunitycenter. com Click Join University at the top of the bar Insurance Community University 66