Insurance Unit - Frequently Asked Questions

What is workers′ compensation insurance?

Workers compensation is a state-mandated, "no-fault" insurance system that pays benefits to workers injured on the job to cover medical care, part of lost wages and permanent disability. In return, employers receive immunity from civil lawsuits by employees over such workplace injuries. Employers can meet their workers′ compensation obligation by purchasing insurance or by becoming a state-certified self-insurer.

return to top                                              147

Does an employer have to carry workers′ compensation insurance?

In the state of Missouri you are required to carry workers’ compensation insurance if you have five or more employees, unless you are in the construction industry, then you must carry workers’ compensation insurance if you have one or more employees. Employers that don’t have the required number of employees or who have employees in the exempt categories may “elect” to come under the law and carry workers’ compensation insurance. Exempt employers that decide not to purchase workers compensation insurance or to self-insured remain exposed to civil lawsuits brought by employees who are injured during work. Sole proprietors and partners are not themselves covered unless they elect to be covered; close family member-employees and members of a limited liability company are presumed to be covered unless they opt out. See exemptions.

return to top                                              148

What are the penalties under the new law for workers′ compensation fraud?

The penalties for certain types of fraud are a class D felony. For example, any person who knowingly presents a false or fraudulent claim for the payment of benefits on a workers′ compensation claim, or any insurance company or self-insured employer refusing to comply with known and legally indisputable compensation obligations with intent to defraud. The following fraud cases are still regarded as a class A misdemeanor. These include, but are not limited to, to knowingly present multiple claims for the same occurrence with intent to defraud, to knowingly assist or conspire with any person who knowingly presents a false or fraudulent claim for the payment of benefits, to knowingly submit a claim for a health care benefit that was not used by or on behalf of the claimant, to knowingly make false or fraudulent statements with regard to entitlement to benefits with the intent to discourage an injured worker from making a legitimate claim. If a person has previously been found to be guilty or pled guilty to workers′ compensation fraud, and subsequently commits fraud, that person shall be guilty of a class C felony. If a person prepares or provides an invalid certificate of insurance as proof of workers′ compensation coverage the person is guilty of a class D felony and is liable to the state of Missouri for a fine up to ten thousand dollars or double the value of fraud, whichever is greater.

return to top                                              149

How do I obtain coverage?

You can purchase workers′ compensation insurance coverage from a private insurance company that is authorized to insure workers′ compensation liabilities in the state of Missouri by the Department of Insurance, Financial Institutions and Professional Registration (DIFP)or, be granted self-insurance authority by the Division of Workers′ Compensation if you meet the requirements. . For employers seeking help finding competitively priced insurance, the DIFP has developed an online rate checker to give the rates for all insurance carriers. You will need to have your 4-digit job classification codes available. If you cannot find an insurance company that will sell you workers′ compensation insurance, you may buy coverage from the state′s "assigned risk pool," through Travelers Commercial Casualty Company. Its toll-free number is 800-842-9346. If you are seeking to be an individual self-insured employer or to join a self-insured group of employers, contact the Division of Workers′ Compensation at 573-526-3692.

return to top                                              150

How is workers′ compensation insurance priced?

Since January 1, 1994, Missouri insurance companies have set rates without approval of the DIFP. Generally, insurance companies base their rates on loss data on each job classification code compiled by the National Council on Compensation Insurance (NCCI). The NCCI also is responsible for maintaining the job-classification code system and administering the experience rating plan. The NCCI can be reached at 800-622-4123 or via their Web site..

return to top                                              151

What is the period of Limitations to file a claim for compensation with the Division?

Under the Missouri Workers′ Compensation Law, an employee must file a Claim for Compensation with the Division within two years after the date of injury or death or the last payment made on account of the injury or death by the employer or its workers′ compensation insurance carrier. The period of limitations is extended to three years if the employer/insurer does not timely file the First Report of Injury with the Division. The period of limitations for occupational diseases does not begin to run until it becomes reasonably discoverable

return to top                                              152

When do insurers and third-party administrators have to report an injury to the Division?

Insurers and third-party administrators have 30 days after knowledge of the injury to file a First Report of Injury with the Division of Workers′ Compensation under the rules and in such form and detail as the Division may require. Employers are required to report the injury to the insurance carrier or third-party administrator within five days of the date of the injury or within five days of the date on which the injury was reported to the employer by the employee, whichever is later. The law provides that any employer or insurer who knowingly fails to report any accident to the Division or knowingly makes a false report or statement in writing to the Division shall be deemed guilty of a misdemeanor.

return to top                                              153

If I am a self-insurer, do I need a third-party administrator?

Yes, you will need a third-party administrator that holds a valid certificate of authority from the Missouri Department of Insurance, Financial Institutions and Professional Registration or otherwise meets the requirements of Section 376.1075 to 376.1095, RSMo to provide claims administration services and that operates as a business registered in the state of Missouri, unless you apply for self-administration of your claims.

return to top                                              154

Do I need to notify the Division of changes to my self-insurance program?

Yes, the employer shall notify the Division at least 30 days prior to any change of ownership, operations, service company, address, security, or any other change that affects the employer′s self-insurance status.

return to top                                              155

I am an employer with multiple subsidiaries. Would my subsidiaries be covered under the same self-insurance authority as the parent company?

Per 8 CSR 50-3.010 (2), "Each legal entity desiring to self-insure shall submit a separate application." Therefore, the parent company and each of its subsidiaries would have to apply for its own separate authority. This also means a parent company already holding self-insurance authority may not add a subsidiary to its authority. The subsidiary will need to submit its own application.

return to top                                              156

How long does it take for an application to be processed? My policy expires soon and I want to be self-insured by the time it is renewed.

Applications generally take 30-60 days to be processed. However, it may take longer, depending on how complete the initial application is, and how long it takes for the safety inspections to be completed. If you are seeking self-insurance authority, and the application is not processed before your policy expires, you will need to continue your coverage until a decision is made regarding the application.

return to top                                              157

The parent company and several subsidiaries are already self-insured. Do I need to resubmit the same data, such as the Third Party Administrator agreement, that applies to all the other entities? Will the application still take that long?

Each application will still need to have all items included with it, regardless whether it is the same information shared by another self-insured entity. Because onsite safety inspections will need to be performed, the application process will still take approximately 30-60 days to be processed.

return to top                                              158

What are the onsite safety audits?

As part of your application, a representative of the Missouri Workers′ Safety Program (please check if this is the correct name being used) will visit locations of your facilities and review if policies and procedures are followed, as per your written safety program. The representative then will report any deficiencies and provide suggestions as to what may need correcting. An acceptable safety program will need to be in order prior to full self-insurance authority being granted.

return to top                                              159

How much security is required to be posted? How is this amount calculated?

Per 8 CSR 50-3.010 (3)(B)1, an employer is required to "provide security in the minimum amount of two hundred thousand dollars ($200,000) and the division may, if it deems advisable in any particular case, require a larger amount. . . ." Many factors are considered in determining the amount of required security. The two main factors are the based on the employer′s financial statements and loss history.

return to top                                              160

Due to a corporate restructure, our current self-insured entity was merged out of existence, and a new entity was created. Will the new entity need to apply for self-insurance? Since the new entity has the same employees, can we transfer the security from the old self-insured entity to the new one? My broker does not have any problems with this.

The new entity will need to apply for its own self-insurance authority. There is an exception. If the current self-insured was merged into another self insured, then a new application would not be required. This information will need to be provided to the Division. The new self-insured entity will need to post its own security. Security may not be transferred to or combined with other related entities′ authorities.

return to top                                              161

How do I get my security reduced?

Self-insured employers seeking to get their security reduced should submit the following to the division:

  • A formal request from the self-insured employer (on company letterhead);
  • The most recent two years audited financial statements; and
  • Currently valued loss runs for the self-insured period. The loss runs must include the total incurred, total paid and total outstanding for all losses for the past ten years, as well as, the same information for any open claims that occurred prior to the past 10 years.

return to top                                              162

How do I get my security released?

Please submit your request to the Division. The Division will provide you with a complete list of the requirements to process the request.

return to top                                              163

What forms of security are acceptable? What are the requirements for each?

Security may be posted with the Division in the form of a surety bond, escrow agreement, or irrevocable letter of credit. Forms for each form of security are available on our Web site. You must use the division forms. If you have questions about procedures after reviewing the forms, please contact the Division. There is one form for Bond of Employer Carrying His Own Risk (WC-82B); one for Escrow Agreement (WC-82E); and two for the irrevocable letter of credit. The two forms for the irrevocable letter of credit are the Irrevocable Letter of Credit (WC-249) and the Authorization for Release of Confidential Information (WC-249-3).

return to top                                              164

I keep getting a notice that my Excess Insurance Certificate is unacceptable. What is the Division looking for on the certificate?

Excess Insurance Certificates should not be submitted as a substitution to the Statement of Specific and Aggregate Excess Insurance Coverage (WC-121), but may be submitted in addition to the WC-121. The WC-121 should be submitted in the name of the approved self-insured entity, and only the approved self-insured entity. Forms submitted in the name of the parent company, where the parent company does not hold self-insurance authority, will not be accepted. Forms listing additional subsidiaries of the parent, where the subsidiaries do not hold self-insurance authority, will not be accepted. Excess policies may only be issued by an insurance carrier admitted by the Department of Insurance to do business in this state with specified policy limits and retention amounts approved by the Division. The insurance carrier shall be AM Best rated A- or better.

Our broker informed me that we can save money by increasing our self-insured retention. What is required for a retention increase?
Prior to requesting a retention increase, realize you are putting yourself at more risk, in the event a serious accident occurs. Where you may be saving in premiums now, when a serious accident occurs, you may be putting out more money to cover the injury. Also, you may be required to post additional security due to the retention increase. If you wish to request a retention increase, the following will need to be submitted to the Division for review:

  • A formal increase request from the self-insured employer with a specified self-insured retention amount;
  • A current detailed loss run starting with the first year of self-insurance authority until present;
  • The most recent two years audited financial statements;
  • Copy of the most recent Table 1 or a listing of class codes and yearly payroll for each class code; and
  • Current Missouri Only Experience Mod.

return to top                                              165

Our broker informed me that we can save money by increasing our self-insured retention. What is required for a retention increase?

Prior to requesting a retention increase, realize you are putting yourself at more risk, in the event a serious accident occurs. Where you may be saving in premiums now, when a serious accident occurs, you may be putting out more money to cover the injury. Also, you may be required to post additional security due to the retention increase. If you wish to request a retention increase, the following will need to be submitted to the Division for review:

  • A formal increase request from the self-insured employer with a specified self-insured retention amount;
  • A current detailed loss run starting with the first year of self-insurance authority until present;
  • The most recent two years audited financial statements;
  • Copy of the most recent Table 1 or a listing of class codes and yearly payroll for each class code; and
  • Current Missouri Only Experience Mod.

return to top                                              166

Our company has changed names/was bought out by another company? What do we need to submit to the Division?

It depends. On the surface, it may appear that you had a simple name change, but it is possible that a merger occurred and a new application for self-insurance authority may need to be submitted. You are required to notify the Division at least 30 days prior to any changes in name or organizational structure.

return to top                                              167

Does an individual self-insured employer incur any surcharges or taxes?

As required by Section 287.690 and 287.715 RSMo, et. seq. the state of Missouri shall impose a workers′ compensation administrative tax and Second Injury Fund surcharge. Current Rates.

return to top                                              168

What should I do if I wish to terminate my self-insurance authority?

In order to terminate your self-insurance authority, please submit the following to the Division:

  • A formal notification from the self-insured employer who wishes to voluntarily terminate its self-insurance authority;
  • Detailed loss runs from the first date of self-insurance authority through the termination request date;
  • Self-Insurer′s past two years of audited financials; and
  • Copy of certificate of insurance for the replacement coverage.
  • The Division may require additional information.

return to top                                              169

What is the excess insurance policy limit requirement?

Statutory limits are required, please contact the Division if you have any questions.

return to top                                              170

Are self-insured employers and groups allowed to handle their claims differently or pay different benefits than insurance carriers?

No. The injury reporting and benefit payment requirements and other provisions contained in the law are the same under self-insurance or a workers′ compensation policy.

return to top                                              171

My employer is self-insured. My weekly check is always late. What can I do?

If you wish to make a complaint against a self-insured employer or group, contact one of the Insurance Unit′s Self-Insurance Claims Auditors. While most complaints can be resolved with a telephone call, if the Division receives repeated complaints on the same issue or receives a complaint that is indicative of non-compliance issues the Division may initiate a compliance audit of the employer or group based on the complaint.

return to top                                              172

Is there a Guarantee Fund for groups?

No.

return to top                                              173

What are the on-site safety audits?

As part of your application, a representative of the Missouri Workers′ Safety Program (please check if this is the correct name) will visit your facilities and review whether policies and procedures are followed, as per your written safety program. The representative then will report any deficiencies and provide suggestions as to what may need to be corrected. An acceptable safety program must be in order prior to full self-insurance authority being granted.

return to top                                              174

Who sets the premium amount for my group?

Groups set their own premiums following the procedures outlined in The Rules Governing Self-Insurers (6)(A)3.

return to top                                              175

What if my employer is no longer in business?

You will continue to contact the group′s claims adjuster.

return to top                                              176

What forms of security are acceptable? What are the requirements for each?

Security may be posted with the Division in the form of a surety bond, escrow agreement, or irrevocable letter of credit. Forms for each form of security are available on our Web site. You must use the division forms. If you have questions about procedures after reviewing the forms, please contact the Division. There is one form for Bond of Employer Carrying His Own Risk (WC-82B); one for Escrow Agreement (WC-82E); and two for the irrevocable letter of credit. The two forms for the irrevocable letter of credit are the Irrevocable Letter of Credit (WC-249) and the Authorization for Release of Confidential Information (WC-249-3).

return to top                                              177

Does a group trust or its members incur any surcharges or taxes?

As required by Section 287.690 and 287.715 RSMo, et seq. the state of Missouri shall impose a workers′ compensation administrative tax and Second Injury Fund surcharge. Current Rates.

return to top                                              178

What if my employer is no longer a member of the group?

When a group trust voluntarily terminates its self-insurance authority the group remains responsible for the handling and payment of all cases incurred or arising from the time period in which it held self-insurance authority. This obligation is ongoing and continues until all cases are closed.

return to top                                              179

What if the group that my employer belonged to is no longer in business?

When a group trust voluntarily terminates its self-insurance authority the group remains responsible for the handling and payment of all cases incurred or arising from the time period in which it held self-insurance authority. This obligation is ongoing and continues until all cases are closed.

return to top                                              180

Do I need to notify the Division of changes to my self-insurance program?

Self-Insured employers are required to notify the Division at least thirty (30) days prior to any change of ownership, operations, service company, address or any other change that may affect the employer′s self-insurance status. If advance notice cannot be provided due to statutory or regulatory restrictions then the Division is to be notified immediately upon public disclosure.

return to top                                              181

Are self-insured employers and groups allowed to handle their claims differently or pay different benefits than insurance carriers?

No. The injury reporting and benefit payment requirements and other provisions contained in the law are the same under self-insurance or a workers′ compensation policy.

return to top                                              182

My employer is self-insured. My weekly check is always late. What can I do?

If you wish to make a complaint against a self-insured employer or group, contact one of the Insurance Unit′s Self-Insurance Claims Auditors. While most complaints can be resolved with a telephone call, if the Division receives repeated complaints on the same issue or receives a complaint that is indicative of non-compliance issues the Division may initiate.

return to top                                              183