Protection for Members
The Workers' Compensation Trust (Trust) is designed to be a cost effective alternative to the commercial market. The Trust is funded entirely through member contributions in the form of premiums and investment income earned each year. By statute, the policyholders of the Trust are individually and jointly responsible for all expenses paid by the Trust. This responsibility is limited to their proportionate share of the annual premium.
The primary purpose and operating philosophy of the Trust is to reduce members Workers' Compensation insurance costs. This is accomplished through efficient insurance plan design, effective loss control services, and aggressive claims administration.
Each component of the Trust program has been exclusively developed to meet the unique needs of the Connecticut healthcare community. The group self-insuring mechanism allows for the return of surplus funds; customized loss prevention services and safety education to minimize the risk of occupational injury; along with professional claims administration to ensure efficient case management.
The Trust was established May 1, 1981. During the first year of operations, eight hospital members began participating and premium contributions were just over $1 million. By 1986, membership had more than doubled to 19 facilities and annual premium contributions exceeded $2 million. Today, there are more than 440 members with written premiums exceeding $50 million. As more and more members join the Trust's statistical base, the group self-insuring mechanism becomes even more effective in minimizing overall costs.
Operations are overseen and directed by a Board of Directors. The Board consists of elected directors from past and present members as well as an ex-officio member who serves as the President & Chief Executive Officer. All claims administration, managed care, risk management, marketing and underwriting services are provided from the Trust's location in Wallingford.
One of the cornerstones of the Trust's success is the collective activism of member institutions. The Trust's activities are guided by members through their participation with the Board of Directors and various Board committees.
Since the sole purpose of the Trust is to provide members with specialized coverage and services, it is extremely responsive to member input and recommendations. Member's suggestions and inquiries are promptly brought before the Board of Directors for consideration. All strategic planning and risk management policies are formulated only after considerable member involvement.
Premium Return Plan
The Trust has always had a Premium Return Plan which returned excess premium to members. Over $36 million in premium returns have been returned to participating members since the Trust's inception. Premium returns are declared by the Board of Directors, based on the overall financial position of the Trust. Each member's share of the return is determined by its individual loss experience and their number of years of participation in the Trust for the previous five years.
Specific Excess Coverage
The Trust purchases Specific Excess insurance on an annual basis. This coverage provides for reimbursement of one hundred (100%) of a loss after the retention has been paid. The retention level has been $750,000. As a result, policy years with that retention will never be impacted beyond $750,000 per claim/occurrence in the event of catastrophic claims.
Although such has never occurred, the Board of Directors realizes that an assessment to any policyholder would be detrimental to the future viability of the Trust and it has established appropriate safeguards against the possibility of ever making an assessment.
In 1996, the Board voted to establish a Capital Fund. The Fund was established to be available for use by any policy year. If available, the Board may elect to contribute an amount from excess funds from the policy year to the Capital Fund. The Directors may use the Capital Fund to avoid a potential assessment in any open coverage year.
The Trust maintains a conservative investment strategy. Eighty percent (80%) of the funds are invested in the bond market; twenty percent (20%) in equities. The Board has retained SEI Asset Management Group, a highly respected firm, to manage the investments of the Trust.