Workers' comp insurance is now one of the more maligned insurance lines. Other than the Affordable Care Act, much negativity spread quickly throughout the press.  

James Moore

Many employers consider WC as a tax of sorts. Some employers just write the check and let it roll on.

Let us look at five ways that WC is so unique. Please remember that there are many exceptions to the rule. The references here are to most states, not all states. 

1. WC does not appear on any paycheck stub, IRS Form 1099, or on any statement that an employee or subcontractor receives from the employer or contractor (exception: Washington). Workers' comp remains a purely employer-based variable cost insurance. Even health insurance premiums now appear on W2s. 
2. Two rating bureaus set the rates for most of the states. The National Council on Compensation Insurance and the Workers' Compensation Insurance Rating Bureau are the two main rating bureaus that cover a very large portion of the states. However, the insurance carriers can deviate from those rates very easily. 
3. Workers' comp insurance provides benefits as a second-party insurance. The system does not provide first-party insurance such as homeowners or automobile coverages. The injured workers receive benefits as a second party to the employer.   
4. States oversee every aspect of paying benefits. The enormous amount of forms that states approve for files has been the bane of many adjusters.
5. Overall, no two states' systems function the same. Similarities do exist but WC is not a cookie-cutter type insurance from state to state.
6. Bonus: Most insurance lines will exist long into the future. Workers' comp insurance may not exist in its current form much longer. I wrote "Death of Workers' Comp" many years ago.  

The same factors are still in play. Even the pundits that thought I was crazy are now starting to agree that everything may change soon. The feds are even starting to look at some type of national regulation.

The list could go on for pages and pages. If you see a major one that I missed, please let me know in the comments section.

This blog post is provided by James Moore, AIC, MBA, ChFC, ARM, and is republished with permission from J&L Risk Management Consultants. Visit the full website at www.cutcompcosts.com.