EXCESS INSURANCE VS. REINSURANCEFOR WORKERS’ COMPENSATION SELF INSURANCE

EXCESS INSURANCE REINSURANCE

Excess insurance is an admitted insurance product.

Reinsurance is insurance purchased from one insurance company by

another insurance company.

Reinsurance rates and forms are not filed with the state insurance

department.

Reinsurance is not standardized. Each contract is individually

negotiated.

Reinsurance may have more exclusions than excess insurance

(e.g. Terrorism).

Reinsurance provides coverage for catastrophic losses. Reinsurance can

also provide protection within the retention of an excess policy.

A reinsurance contract has a fixed limit - meaning the amounts paid for

an injured worker could exceed the amount of the policy limit.

Reinsurance is not covered by any guaranty funds in the event of the

reinsurer’s insolvency.

Reinsurers are more willing to underwrite heterogeneous risks, as well

as more hazardous risks.

If an employer, or group of employers is not classified as an “insured” under the

state regulations, they are prohibited from buying reinsurance.

The excess insurer files rates and forms with the state insurance department.

Excess insurance usually provides “statutory” limits – meaning all payments made under the Workers’ Compensation requirements, without limit.

Excess insurance protects the self-insured entity from catastrophic losses.

Excess insurers are covered under the states’ guaranty fund which will pay claims on behalf of insolvent insurers.

Excess insurers prefer writing policies for homogeneous risks.

Excess insurance is a standardized product.

Excess insurance provides broad coverage.

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