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Admission to the Self-Insurance Program

The Department's Worker's Compensation Division (Division) is responsible for administering Chapter 102, Wisconsin Statutes, of which provisions for self-insurance are a part. Staff within the Division coordinate and monitor Wisconsin's self-insurance program.

1. What criteria are used by the Department to determine an employer's exemption?
   In addition to the minimum requirements for the initial application or renewal of self-insurance status, the Department also evaluates other factors which are needed to determine the amount of securities, and the number and kind of reports to be submitted to assure the prompt and full payment of all worker's compensation liabilities. These additional factors include:

1. The financial strength and liquidity of the employer to include: profit and loss history; financial and performance ratios; characteristics and trends for the employer or the consolidated group of employers to which the employer belongs; characteristics and trends for other employers of the same or the most similar industry in which the employer of the employer’s consolidated group is involved; and changes in other key financial conditions affecting the employer's ability to promptly pay all compensation.

2. The employer's organizational structure, management background, kind of business, length of time in business (minimum of five years), and any intended or newly implemented reorganization including but not limited to merger, consolidation, acquisition of new business, divesting or spinning off of assets or other changes.

3. The nature and extend of the employer’s business operations and assets in the state of Wisconsin. These may include the tangible property of the employer and its subsidiaries or parent corporation, including but not limited to merger, consolidation, acquisition of business, divesting or spinning off of assets or other changes.

4. The employer's bond or other business ratings.

5. The number of the employer's employees, payroll and hours worked in Wisconsin.

6. The employer’s performance indicators under ch. 102, Stats., including but not limited to, promptness or time taken in making first indemnity payments, promptness or time taken in submitting first reports, and injury and illness incidence and severity rates.

7. The existing or proposed claims administration, occupational health, safety, and loss control programs to be maintained by the employer. The department may require certification of the occupational safety and health program by state or independently qualified specialists.

8. The worker’s compensation loss history experience modification factor, reported losses, loss reserves, outstanding liability, and worker’s compensation premium of the employer.

9. Excess insurance, surety bond, guaranty by the parent company, and guaranty of U. S. parent, in the event the ultimate parent is a foreign entity.

2. How is an employer's application to self-insure evaluated, by whom, and how long does it take?

   When the Department receives an application for exemption, it is first checked by Division staff for general accuracy, completion and ability of the employer to meet the minimum requirements and criteria for exemption. (The application constitutes a request for hearing before the self-insurers council, providing the Division staff determines the employer meets the minimum requirements and criteria for exemption.)

   If portions of the application are incomplete or found to be in error, it is returned to the employer for correction or clarification before any determination on qualification is made.

   Everything accompanying the application become the property of the Division and are not returnable, including the application fee, which is non-refundable. If the employer's application is rejected, the Division will properly dispose of the material.

   If the employer does not meet the basic minimum standards or requirements for exemption, the application is denied, and the employer so notified, at this first step in the application's processing.
   
   When the data submitted appears to show that an employer may qualify for self-insurance, a hearing is scheduled among representatives of the applying employer, administrative staff of the Division, and the self-insurers council. Wisconsin Statutes provide for a self-insurers council to advise the Department on self-insurance matters. The council members are appointed on a three-year basis, by the Wisconsin Labor and Industry Review Commission, and are representatives of employers, which are currently self-insured in Wisconsin.
   
   The hearing is a meeting between representatives of the employer, the Division, and the self-insurers council is an informal discussion covering the subjects of the applying employer's method of claims handling, safety and health practices, medical services, rehabilitation of injured or ill employees, and the financial status of the company. The purpose of the hearing is to resolve any questions the applying employer may have on the responsibilities involved in being self-insured, to offer the employer suggestions in operating a successful self-insurance program by persons already experienced as self-insurers, and to enable the Council an opportunity to resolve any questions they may have and form their recommendation to the Division and the Department on the approval or denial of the employer's application.
   
   After this hearing, the self-insurers council will make its recommendation on the approval or denial of the application to the Division. If the self-insurers council recommends denial of an exemption from the duty to insure and the Division concurs with that decision; the applicant may appeal that finding to the Secretary of the Department. The decision of the Secretary is final.
   
   If the self-insurers council recommends approval of the application, it may recommend security requirements also. If the Division concurs, a special order is written which states the specific conditions with which the employer must comply (e.g., bonding and excess insurance requirements). It is then submitted to the Department Secretary for approval or denial. If the Department Secretary approves the special order, a copy of the order is issued to the employer.

3. How long does it take to process an application for self-insurance?
   
   The average length of time to process an employer's self-insurance application from receipt of an accurate and complete application to approval or denial is three months.

4. What fees are involved in being a self-insured employer?
   
   The Act provides that each year the Department shall assess upon and collect from each worker's compensation insurance company and self-insured employer, the proportion of total costs and expenses incurred by the Department for administering the Act for the current fiscal year plus any deficiencies in collections and anticipated costs from the previous fiscal year. The assessment is determined from cases initially closed by the Division during the preceding calendar year and is based on the ratio of total indemnity paid or payable by each carrier and self-insured employer, other than for increased, double or treble compensation. In addition, each self-insured employer shall also be assessed a pro rata portion of the Department’s cost of administering the self-insured program, calculated in the same manner as the general assessment above, plus $200.

   Additionally, s. 102.28(7) of the Act calls for a special assessment of all self-insurers if a current or former self-insurer can't make its worker's compensation payments. This is an important consideration for employers contemplating the filing of an application. All current self-insured employers, including new approved applicants, are and will continue to be assessed annually as this condition does exists.

   Under s. 102.59(2), Self-insurers and insurance companies must also make payments into a "work injury supplemental fund" for the loss or total impairment of a hand, arm, foot, leg, eye or death, resulting from an occupational injury or illness.

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