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The Basics of the WCJUA

The Basics of the WCJUA

Every state has laws for businesses regarding Workers Compensation insurance. What these regulations don’t take into account is how difficult it is for certain industries to obtain coverage.

Fortunately, state labor departments and insurance departments have created Workers Compensation Joint Underwriting Associations (WCJUA) to handle hard-to-place policies.

What is the WCJUA?

The WCJUA or JUA goes by different names in different states. It may also be called the high risk pool, a residual market or an assigned risk plan.

Insurance companies that do business within your state are required to write a certain percentage of high risk customers. These companies may split the risk with other insurance companies contracted to write these businesses.

JUAs are heavily regulated by the state and require strict application and underwriting procedures. Because of the typically high risk nature of JUA customers, premiums are higher than in the open market.

Who Needs the JUA?

A JUA is almost never the first stop for any business, and is usually the insurer of last resort for employers. You may need the JUA if you fit into any of the following categories:

  1. High number of high payment claims.
  2. High risk industry (for example: roofers, tree trimmers, circus, skydivers, etc.)
  3. Chronic premium payment issues.
  4. Small number of employees.
  5. New business owner with no prior industry experience.

Your insurance broker may be required to submit your application to at least three other open market insurers and receive declinations prior to submitting an application to the JUA.

What To Expect

The WCJUA is much the same as any other workers compensation insurer in that they offer both employers liability coverage (Part I) and workers compensation benefits (Part II) to injured workers. However, Other States coverage (Part III) may be limited or excluded from the policy. If you have employees in other states they will need to be insured on a separate policy or through the JUA in that state.

WCJUA policy rates are sometimes higher than the standard rates used on the open market and may also require higher minimum premiums. Many WCJUA policies include multipliers above and beyond your experience modification factor which further increases your premium.

Underwriting on these policies is also arduous. Many insurance brokers can quote coverage online, but the application process includes a lot of paperwork and every “i” must be dotted and every “t” crossed before the bind order will be accepted and the policy issued. This can sometimes take up to a month or more depending on your state, so don’t wait until the last minute.

Your insurance broker can perform a risk management analysis on your current workers compensation coverage and claims to determine if the WCJUA is the right coverage for you. If it is, your broker can also help you make a game plan to get your business OUT of the WCJUA as soon as possible and back into the open market.

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