US Specialty Underwriters

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US Specialty Underwriters underwrites for a carrier that has been a long-time participant in the Excess Workers’ Compensation industry. The carrier’s financial group carries an S&P rating of A+ and an A.M. Best rating A- (IX).
In addition to the basic Excess Workers’ Compensation Coverage, US Specialty Underwriters can provide special endorsements that improve an insured’s risk management profile. Two of those endorsements are Cash Flow Protection and Communicable Disease.

Cash Flow Protection

Our Cash Flow Protection endorsement provides an additional layer of financial protection on top of the traditional specific excess coverage. Self-insured employers typically carry a much higher self-insured retention on workers’ compensation policies than their deductible on property and casualty policies. That is because the payout on workers’ compensation losses will generally be paid out over a period of many years. However, there are workers’ compensation claims where, due to significant initial medical costs or multiple employees being involved in a single occurrence, the self-insured retention is paid out within months rather than years. Our Cash Flow Protection endorsement limits the amount that an insured pays on a single occurrence within an accident year to a level much less than their typical per occurrence self-insured retention.

The following is an example of how this endorsement can help protect a self-insured employer from the financial impact of a catastrophic workers’ compensation loss.

Table A: Assume that the insured experiences a workers’ compensation claim that pays over a period of ten years a total of $580,000. The insured is covered through US Specialty Underwriters with a self-insured retention of $350,000 and has elected the Cash Flow Protection endorsement with an annual limit of $95,000. Without Cash Flow Protection, the insured would have paid out the entire $350,000 within the first two years of the claim ($250,000 in year 1 and $100,000 in year 2). With Cash Flow Protection, the insured does not pay out the entire self-insured retention until the eighth year.

Table A

Year	Total Losses Paid	Annual Self-Insured Retention Limit	Amount Recoverd by Insured
1	250,000	95,000	155,000
2	100,000	95,000	5,000
3	50,000	50,000	0
4	30,000	30,000	0
5	25,000	25,000	0
6	25,000	25,000	0
7	25,000	25,000	0
8	25,000	5,000	20,000
9	25,000	0	25,000
10	25,000	0	25,000
Totals	$580,000	$350,000	$230,000

Table B

Year	Total Losses Paid	Annual Self-Insured Retention Limit	Amount Recoverd by Insured
1	250,000	95,000	155,000
2	330,000	95,000	235,000
Totals	$580,000	$190,000	$390,000

Table B: Assume the same claim is closed and settled after the second year, and the insured had elected the Cash Flow Protection. The net loss would be $190,000 ($95,000 per year) versus the entire $350,000 self-insured retention.

Download Cash Flow Protection Illustration

Communicable Disease

One of the greatest exposures to catastrophic workers’ compensation losses for a health care facility is the outbreak of infectious disease involving a large number of employees. An excess workers’ compensation policy without a Communicable Disease endorsement would consider such a catastrophic loss to be an occupational disease, meaning that the per-occurrence self-insured retention would be applied separately to each employee infected. A $350,000 self-insured retention could quickly turn into a $1.4 million self-insured retention should as few as four employees become infected, verses a $350,000 self-retention for a policy with a Communicable Disease endorsement attached. In other words, the self-insured retention applies to the entire loss, regardless of the number of employees infected.

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