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Industry Insights

Moore: Are Alternative Workers' Comp Insurance Programs Great Choices?

  • National

One of the most popular consultant assignments we receive starts with a question such as in the headline above. Alternative workers' comp insurance programs flourish just after a recession starts or when businesses are booming. So many articles on alternative programs to voluntary workers' comp market policies appear on my website.

James Moore

James Moore

Most of the articles on alternative workers' comp insurance programs were generated due to a question posed by an employer when it decides to branch out into other types of coverage, or at least explore the possibilities.

Let us cover some of the alternatives. Two sentences will be added to each alternative workers' comp program. One will be the most positive and one will be a negative consideration. Click on each heading if you wish to read more articles contained in the J&L website.


Self-insurance makes up approximately 15% of insurance programs in the U.S. Many employers used to consider becoming self-insured as more of a vanity project than cost savings. You have to qualify with each state where you have a location.

Large-deductible policy

This is an alternative to self-insurance where the employer cannot qualify for self-insurance. Large-deductible insurance carriers still report the insurance experience modification factors to the rating bureaus, unlike self-insurance. Using a large-deductible policy as an alternative workers' comp program can save premium dollars if the conditions are right and various accurate decisions have been made before policy issuance.

Captives (onshore and offshore) 

The reasons for using a captive insurance carrier are very similar to the large-deductible programs, but 831(b) small captives have come under a large amount of scrutiny from the Internal Revenue Service after being named to the IRS’ Dirty Dozen tax avoidance schemes. Much thought and preparation need to go into captive planning to not run afoul of the increased scrutiny and regulations.

Professional employer organizations

PEOs used to have a bad reputation for going out of business and leaving their creditors, covered employers and injured employees to fend for themselves. PEOs have turned their reputations around for the most part. Many offer alternative workers' comp programs along with other types of employee benefits and pay-go payment terms.

All other types

There are so many alternatives to a voluntary market workers' comp policy. Sometimes, however, regular insurance policies can work if the employer adheres to a strict safety and risk management program.

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

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