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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: An Invaluable Risk Management Tool

The significant initial medical costs associated with catastrophic claims can result in exhaustion of the self-insured retention in months rather than years. As a hedge against such cases, employers may seek a lower SIR, but this is often cost-prohibitive (and sometimes unavailable). To provide employers with a cost-effective alternative, US Specialty Underwriters offers their Cash Flow Protection endorsement, which limits the insured’s payment for a single occurrence within an accident year to a level far below the typical SIR.

In Table A below, we assume the insured experiences a claim that pays $750,000 over a ten year period. Through US Specialty Underwriters, the insured purchased an Excess WC policy with a $500,000 self-insured retention, plus a Cash Flow Protection endorsement with an annual limit of $150,000.

   
TABLE A
 
   
 
Year
Total Losses Paid
Per Year

Insured Payment WITHOUT
Cash Flow Protection

Insured Payment WITH
Cash Flow Protection
1
275,000
275,000
150,000
2
225,000
225,000
150,000
3
40,000
-
40,000
4
40,000
-
40,000
5
40,000
-
40,000
6
30,000
-
30,000
7
25,000
-
25,000
8
25,000
-
25,000
9
25,000
-
-
10
25,000
-
-
Totals
$750,000
$500,000
$500,000

But what happens if a claim with a similar payout pattern settles much earlier (say, after three years)? As illustrated in Table B below, there is an even starker contrast between having - and not having - Cash Flow Protection.

Download Cash Flow Protection Illustration

   
TABLE B
 
       
Year
Total Losses Paid
Insured Payment WITHOUT
Cash Flow Protection
Insured Payment WITH
Cash Flow Protection
1
275,000
275,000
150,000
2
225,000
225,000
150,000
3
40,000
-
40,000
Totals
$540,000
$500,000
$340,000

In the TABLE B scenario, the insured without Cash Flow Protection still pays out his full $500,000 retention in just two years. But with Cash Flow Protection, his net loss is only $340,000*.

In both scenarios described above, Cash Flow Protection provided many of the benefits of a lower SIR, but invariably does so at a much lower cost. Contact your USSU underwriter to find out how Cash Flow Protection can benefit your client.

*NOTE: USSU’s Cash Flow Protection endorsement has no “recapture” of claim payments or retroactive SIR adjustment when a claim pierces the Cash Flow limit.

Download Cash Flow Protection Illustration
Download Cash Flow Difference Example

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 the per-occurrence self-insured retention would be applied separately to each employee infected. A $500,000 self-insured retention could quickly turn into a $2 million self-insured retention should as few as four employees become infected, as compared to a $500,000 self-retention for a policy with a Communicable Disease endorsement. In other words, the self-insured retention applies to the entire loss, regardless of the number of employees infected.

Strength:
We provide special endorsements that
improve an insured's risk management profile