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Aggregate excess coverage places a limit on the amount an employer pays for all claims incurred during a given time period. So if a company has a year in which it experiences more than the anticipated level of claims activity, it is protected.
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The amount of loss paid plus the reserves established for all claims occurring during the policy year. Reserves are the estimated cost of what remains to be paid on a claim.
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An escrow account funded by the insured at a bank designated by MECC, which is used for the payment of claims by the TPA. The amount of the fund is an estimate of 2 months of the amount that would be paid out in claims during the course of a policy term based on the insured’s past claim experience. At any time during the policy period, the amount of the loss fund is subject to adjustment based on the actual amount of claims that are being paid.
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A combination of aggregate and specific excess coverage, to provide protection against both unusually high frequency and unexpected severity.
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A contractual agreement that is separate from the policy that includes payment terms and is signed by both parties (MECC & Insured).
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A factor by which the insurance company raises or lowers a company's premium, based on claims experience.
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Also known as first-dollar programs or primary workers' compensation; insurance coverage with a fixed premium.
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A workers’ compensation program designed for large employers, usually with multi-state exposures. Our deductible levels typically range from $300,000-1 million. The insurer makes all the payments as it does under a conventional policy, and the insured reimburses the insurer on a monthly basis. The insured is required to post collateral, such as a letter of credit for the estimated amount of claims under the deductible. MECC is responsible for coverage in excess of the deductible amount for each occurrence, and all amounts excess of the aggregate deductible amount.
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Form of financial security provided to the insurer by an approved bank in behalf of the insured.
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When a policy for aggregate excess coverage is written, it specifies a loss fund amount and time period; if all claims that occur within the specified time period exceed the loss fund, the insurance company reimburses the employer the difference.
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The organization that MECC has contracted with for policy administration, data gathering, administration of the claims payment fund, management of the collateral, billing of all premiums, fees, payments of agent commissions and TPA fees.
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The estimated cost of what remains to be paid on a claim.
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When a company self-insures, it takes responsibility for paying its own claims, rather than purchasing workers' compensation coverage from an insurance company.
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The SIR is an amount negotiated by the employer and the excess insurance company. (The SIR is also sometimes referred to as the "specific retention.") It acts as a deductible and is usually stated in increments of $50,000, i.e. $200,000, $250,000, $300,000, $350,000, etc.
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A self-insurer bond (or surety bond) is essentially an insurance policy, which protects the employees of a self-insured employer from the insolvency, bankruptcy or financial impairment of the employer. The surety bond is actually issued to the state self-insurance regulatory authority by an insurer. If the employer becomes financially impaired, the state "calls" the surety bond. The proceeds are then used to satisfy the employer's workers' compensation obligation.
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Specific excess coverage is designed to protect a company from "unexpected" high-cost claims due to a single, catastrophic incident.
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Another term for aggregate excess insurance.