Improve Your Cash Flow with Pay-As-You-Go Workers Comp

by Frank Pennachio, WorkCompEdge Regular Contributor

Workers compensation policy premiums are usually based on estimated payrolls. The final earned premium is determined during a premium audit after the policy expires and is based on actual payroll. When payroll is higher than estimated, the employer owes additional premium, and when payrolls are lower than estimated, money is returned. In current economic conditions, many employers’ payrolls are declining, so an employer may be paying higher than necessary monthly installments due to an overstated payroll estimate at the inception of the policy.

In these challenging times where cash flow is king, employers might want to consider another work comp insurance option known as Pay-As-You-Go.

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A 2009 Collateral Perspective

by Michelle Bradley, SIGMA Actuarial Consulting Group

In October 2006, Lloyd Kelly and I authored a paper titled “Reducing Collateral Uncertainty: A Primer for Negotiations” that was published in Risk Financing Perspectives for the International Risk Management Institute. We expanded the paper in 2008 and published it as “Reducing Collateral Uncertainty” for the Institute’s Risk Financing Manual.

For the purposes of this article, collateral is one type of security that can be provided to a fronting carrier or regulator by a self-insured entity for the credit risk assumed by the carrier or regulator.

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