Requirements of the Self-Insurance Program
The State and its political subdivisions may self-insure without further order of the Department if they do not carry a policy covering all or part of their risks, and if they agree to report faithfully all compensable injuries and agree to comply with the Act and rules of the Department.
- Who May Self-Insurer?
For all other employers, the minimum requirements or standards for an exemption from the duty to insure, other than for the State and its political subdivisions are:
- Can an employer insure a portion of its
operations with an insurance carrier and self-insure another, separate
The Department may grant partial insurance upon being shown that there will be no confusion between the insured and self-insured portions of the employer's liability. Unless the separation of employees and payroll is clear and concise, it has been found that, from the standpoint of the injured worker, divided or partial coverage is not desirable because it leads to a delay in the settlement of the claim. In addition, a good deal of expense on the employees part to recover the worker's compensation to which they are entitled may occur. This is a burden that the injured employee should not bear. It is also important that proper payroll records be kept to enable the insurance carrier to determine the appropriate premium charges.
The self-insurance application contains a section inquiring if all operations are to be self-insured by special Department order. If an employer intends to insure any of its worker's compensation risk in Wisconsin with a full coverage policy, the operation should be clearly identified, and the employer should provide the exact name of the insurance carrier, the policy number, and the policy ending date.
Under the Act, if a dispute should arise between the full coverage insurance carrier and the self-insured employer on the question of responsibility for payment, the employer shall assume full responsibility to immediately make all payments of compensation and medical expenses to the injured employee, without waiting for the dispute to be settled. An employer's exemption from the duty to insure is void if the employer carries a full coverage policy with an insurance carrier and has not applied to the Department and received permission for partial insurance coverage.
- What about bonds and
Are all self- insured employers required to carry either or both?
The Department requires that an employer provide security and excess insurance coverage as a condition for self-insurance.
The minimum amount is $500,000. The amount may be greater based upon the analysis of each employer's financial capacity, and upon the likelihood and severity of injury or disease within the employer's occupational classifications.
* Excess insurance:
Excess insurance policies must be procured from a worker's compensation insurance carrier licensed by the Wisconsin Commissioner of Insurance to write worker's compensation insurance in Wisconsin, and must be written upon the basis of rates and policy form filed with and approved by the Wisconsin Compensation Rating Bureau, P.O. Box 3080, Milwaukee, Wisconsin 53201-3080. (Phone: (262) 796-4540) An actual copy of the excess policy must be on file with the Bureau. Again, excess insurance retention and upper limit of indemnity amounts are based upon the individual analysis of each employer's ability to withstand catastrophe. Any contract between an unauthorized carrier and a self-insurer must be reported to the Department immediately upon inception of the agreement.
- What is the application
A non-refundable fee of $1,100 per parent plus $100 for each subsidiary to be self-insured, shall accompany the initial application(s). An application must be submitted for each Wisconsin employer in a corporate family. The check or money order should be made payable to the Department of Workforce Development.
(i) An employer desiring an exemption from the duty to insure must file an application on Department form WKC-7211, which may result in a hearing before the Self-Insurers Council.
(ii) Corporations, limited liability companies, and limited partnerships shall be registered in the office of the Wisconsin Department of Financial Institutions.
(iii) If the applicant is a corporation, limited liability company, or a partnership and is a wholly or majority owned subsidiary, a guaranty of worker's compensation payments must be submitted on a Department form, executed by the ultimate or top parent company, and be accompanied by a certified copy of a resolution adopted by the board of directors of the top parent company, authorizing and directing the execution of the guaranty.
(iv) Applications by corporations must be accompanied by a certified copy of the resolution adopted by the applicant's board of directors authorizing and directing the execution of the application and agreement forms. Applications by organizations other than corporations shall be signed by one or more persons possessing authority to act for the applicant. Partnerships must submit a consent by all the partners that all individuals executing the application have the authority to act for the applicant partnership.
(v) All applicants, when submitting an initial request for self-insurance, shall submit audited financial statements (which include the opinion of a certified public accountant) for a minimum of the latest five years. To remain self-insured, unaudited quarterly and audited annual financial statements must be submitted as soon as they become available. Companies which submit Form 10Q to the SEC electronically need not send quarterly reports to this Department.
(vi) It is recommended that the employer employ persons located in Wisconsin with knowledge of claims administration under Wisconsin's Act, and occupational safety and health. The persons may be employees of the applicant, its parent company, a subsidiary company, or a service company hired by the employer and acceptable to the Department.
(vii) The employer must have acceptable safety and health performance as measured by worker's compensation statistics and other occupational injury and illness information, including, but not limited to, the employer's federal Occupational Safety and Health Administration (OSHA) compliance and their experience modification factors for the past few years.
(viii) The employer shall furnish satisfactory security (guaranty bond and excess worker's compensation insurance), financial reports and reports on outstanding liabilities before and after self-insurance is granted, not renewed, terminated or revoked, as the Department requires to assure the payment of all past, present, existing and potential worker's compensation liability.