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Self-Insurance and Workers’ Compensation

All employers in the state of Georgia are required to carry workers’ compensation insurance.  However, this does not necessarily mean that they are required to carry one of the state’s approved policies; employers with enough capital are permitted by law to self-insure. Practically speaking, self-insurance can be risky, but it can also be cost effective for some employers with sufficient capital reserves not only to absorb the risks of accidents, but also to perform the actuarial research and statistical analysis necessary to plan for these risks.

Advantages and Disadvantages of Self-Insurance

Employers that opt to self-insure essentially must keep their own statistics, and must rate their risk accordingly. The upshot of this for them is that if managed effectively they can reduce premium costs. The upshot for employees is that their employers have every incentive to provide the safest possible workplace.

The downside for employers is the capital-intensive investment and accounting costs. The downside for employees is the risk of insolvency. Because of these risks, the state has also heavily regulated self-insurance, not only establishing minimum requirements to qualify for the program, but also establishing a safety net trust fund for insolvency.  Because these employers essentially take on the role of insurers (whose insureds are also protected by state insolvency funds), the state similarly acts as a guarantor for qualifying self-insurers. This explains the rigorous requirements.

Requirements

In order to self-insure, employers must satisfy several requirements, many of which parallel the requirements applicable to state approved workers’ compensation insurance policies. To obtain exemption from the insurance requirements of the law, they must satisfy prerequisites. These include capitalization requirements, as well as the keeping of statistics. Self-insurers must prove that they are able to absorb the risks associated with their business on an ongoing basis.            

The Trust Fund

In exchange for proving compliance with the requirements of self-insurance, the state has created a Self-insurers Guaranty Trust Fund. This fund is not designed to protect the employers, but rather to protect injured workers whose self-insured employers have become insolvent. The practical relevance of this for workers’ compensation claimants is fairly straightforward. Injured workers are always legally entitled to be compensated for their injuries. This right to recover does not change due to the insolvency or irresponsibility of their employer. The theory of social insurance that underlies workers’ compensation systems is that the lost productivity and lost income of injured workers constitutes a social cost that the taxpayer will ultimately pay anyway. The affirmative protections and accompanying mandate of the workers’ compensation insurance system are an effort to spread these costs to the most efficient cost bearer (in this case, employers). The trust fund is a stop gap measure for when the system as designed fails. This does not relieve employers of their responsibilities – they may still be subjected to fines and civil penalties for their failure to fulfill their obligations. But the injured worker will not be left out in the cold.

Contact a Georgia Workers’ Compensation Attorney Today

If you are an injured worker in Georgia, you still have rights even if your employer has failed to comply with their legal obligation to carry workers’ compensation insurance. While most self-insured employers have the money to cover their obligations (it takes a lot to meet the requirements), sometimes fraud or misfortune can decimate a company’s capital reserves. And other times, employers are simply too irresponsible to comply with the law to begin with. If your employer has failed to meet their requirements under the workers’ compensation law, this does not leave you without a remedy. Contact the attorneys at Bader Law Firm, LLC. We know how to make sure that you recover what you are owed even if your employer is non-compliant. Call us today.  Do not let your claim slip away due to someone else’s irresponsibility.

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