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The Wisconsin Worker's Compensation Act, provides that all employers covered by the Act either insure their liability with worker's compensation insurance carriers authorized to do business in Wisconsin, or be exempted (self-insured) from insuring liabilities with an insurance carrier by special order of the Department of Workforce Development.
An employer exempted from insuring with a carrier assumes the responsibility for its own worker's compensation risk and payment.
Employees have the right to expect that their work-related injury claims will be promptly paid. This is a fundamental concept of worker's compensation and the integrity of this concept must be maintained.
Self-Insurance is, in risk management, a funding mechanism, and should not be considered as an end in itself, but as a cost-effective method of managing risk.
As a general rule, it is not feasible nor practical to self-insure when the employer's annual worker's compensation premium level is under $200,000, unless there are unusual circumstances.
An employer may be in a non-hazardous industry, but all it takes is one serious injury or death claim caused by an ordinary hazard to create a significant (and perhaps disastrous) liability. How does a small employer budget for $100,000 to $500,000 or more in claims?
Frequently, an insurance carrier will not write difficult lines of insurance such as product liability or auto liability without writing WC insurance. Self-insuring worker's compensation can significantly affect the price and availability of other types of insurance for the same employer.
A prudent self-insurer must continuously review its safety and loss control plan to ensure safe and healthy working practices are developed and maintained for all jobs and all work areas.
A safety coordinator at each location should be considered. Duties may include:
Whether claims are processed by the employer or through a third party administrator, the self-insured employer is responsible for claims payment. Some of the duties which should be considered include:
If an employer has reason to believe that there might be some advantage to self-insure, and before reaching a decision on whether or not to file an application with the Department, the employer should: