For staffing agencies, hearing “Your only option for workers’ compensation coverage is through the assigned risk pool” can feel like a major setback. The assigned risk pool often results in higher premiums, less flexibility, and more challenges with claims handling. Here’s how staffing agencies can position themselves for standard market coverage and secure the best possible terms.
Build a strong loss history
Carriers want to see a track record of stability and responsibility. A detailed report on insurance company letterhead, showing three consecutive years of coverage, demonstrates a commitment to risk management. Using digital tools to organize and present loss history is highly recommended, as many carriers now accept electronic submissions for faster processing.
Take control of claims
Claims history is one of the first things carriers evaluate. Both the frequency (number of claims) and severity (total cost of claims) impact eligibility for standard coverage.
- Prevent claims: Investing in safety training for temporary workers, especially in high-risk industries like manufacturing or construction, can significantly reduce claims.
- Manage open claims: Working closely with claims adjusters to resolve claims quickly and cost-effectively is key.
Improve the Experience Modification Factor (EMR)
The EMR is a critical metric that carriers use to evaluate risk. A lower EMR (below 1.0) indicates fewer and less severe claims, making an agency more appealing to standard carriers.
- Focus on safety: Partnering with clients who prioritize workplace safety and providing proper training for temporary workers can help reduce claims.
- Review the EMR: Working with a broker to ensure the EMR is calculated accurately and reflects the current risk profile is essential.
Be strategic with placements
Carriers evaluate the types of placements an agency makes, including the client, work environment, and job descriptions. High-hazard roles or industries may make it harder to secure standard coverage.
- Review class codes: Understanding which class codes are considered high-risk and avoiding placements that fall into these categories is crucial. With the rise of gig work and remote roles, carriers are reevaluating class codes and risk categories, making it critical for agencies to stay informed about these changes.
- Partner with safe clients: Working with clients who have strong safety programs, and a history of low incident rates can improve an agency’s risk profile.
Showcase growth and stability
Carriers are more likely to take on risks from staffing agencies that show consistent growth and stability. As payroll increases and more placements are made, agencies become more attractive candidates for standard coverage.
- Track payroll growth: Keeping detailed records of payroll growth and sharing this data with carriers can demonstrate stability. Many carriers now offer flexible policies for growing agencies, including pay-as-you-go workers’ compensation options. These can be a great fit for agencies with fluctuating payrolls.
- Demonstrate long-term potential: Showing carriers that an agency is growing sustainably and has a clear plan for the future can improve eligibility for standard coverage.
Why standard coverage is the goal
Securing workers’ compensation coverage with a standard carrier comes with significant benefits for staffing agencies:
- Lower premiums: Standard carriers often offer more competitive rates than the assigned risk pool.
- Flexibility: Agencies gain more options for endorsements, additional states, and customized coverage.
- Efficient claims handling: Standard carriers typically have better resources and processes for managing claims.
By following these strategies, agencies can avoid the assigned risk pool or get out if they’re already there. Each carrier has its own guidelines for evaluating risks, so working closely with a broker to find the best fit is essential.
For more information, contact a Marsh McLennan Agency advisor today.
