Can't find coverage? The assigned risk market

Why a business gets turned down

Insurers can decline a business that is new, very small, in a high-risk industry, or has a poor claims history. Being turned down does not remove your legal duty to carry coverage. Every state has a way for employers to get a policy anyway.

How the residual market works

The safety net is called the residual market or assigned risk market. Depending on the state, it is run by a state fund, a joint underwriting group, a reinsurance plan, or NCCI's Workers Compensation Insurance Plan. Under the NCCI plan, the business is assigned to a servicing insurer that issues and handles the policy. NCCI says the residual market has been about 7% to 8% of premium in the states it serves since 2014.

Where to apply

In states where NCCI runs the plan, a licensed agent submits your application. In states with a competitive state fund, such as California's State Compensation Insurance Fund, that fund often serves as the insurer of last resort. Ask your agent which applies in your state, and apply early so there is no gap.

What it costs

Assigned risk policies often cost more than regular policies. Some states add a surcharge based on your claims history. You will need accurate payroll and job details and usually a deposit.

Getting back to a regular policy

The way out is a better track record and a good presentation to insurers:

• Keep claims down and report injuries quickly.
• Put a written safety program in place and document training.
• Pay premiums on time and keep clean audit records.
• Ask your agent to shop your policy before each renewal. NCCI also runs programs that match employers with regular insurers.