Workers' Compensation vs. Non-Subscriber: The Pros, Cons & Future

Thomas Anderson
Insurance Specialist
 
If your company has recently faced a rate increase on your Workers’ Compensation, there may be a solution that can improve your bottom line. Texas and Oklahoma allow an employer to opt out of Workers’ Compensation and purchase a Non-Subscriber policy to provide injury and disability benefits to their employees in the event of a work related accident. 
 
There can be some confusion on the differences between the Workers’ Compensation policy and electing to purchase a Non-Subscriber policy. To help you decide which may be best for your company, below is a review of the details. 
 
The Basics
 
A Non-Subscriber program is an accident insurance policy that will pay for medical treatments and indemnity (lost time) payments for an injured employee. The actual benefits can be customized or changed depending on the insured’s need or requirements. This customization is not available in the Workers’ Compensation policy and State laws decide the benefit limits. 
 
The Non-Subscriber program provides the employer with greater control when managing employee injuries. With greater control, the employer can have more involvement in the claims process and there is typically a greater incentive for the employer to invest in safety and loss control. This incentive will not only help reduce injuries, but also improve employee morale as their employer is providing a safe work environment. 
 
An additional advantage of the increased control of claims involvement can present an opportunity for the employer to suggest or avoid a specific doctor. This is an advantage over the Workers’ Compensation system and can help reduce fraudulent claims while helping the employee obtain the proper treatment from a trusted physician. 
 
Additionally, the non-subscriber product can reduce premium costs. This is dependent on the historical losses and type of business operations of your organization, but the financial benefits can be significant. 
 
Potential Challenges:
 
With any business decision, there are potential downsides that should be reviewed and addressed. The key difference is that in Workers' Compensation laws, an injured employee gives up certain abilities to file lawsuits against their employer. In the Non-Subscriber program, there is a chance the employee could file a suit against the employer for negligence in the event of an injury. There are ways to mitigate the chances of this occurring and having a proactive risk management and safety program in place is an important part of the process. 
 
The second potential challenge is that Workers’ Compensation laws are regulated by each state. If your company is a multi-state operation with employees outside of Texas and Oklahoma, you may have to purchase a separate Workers’ Compensation policy to cover the employees in those additional states. This could erode some of the potential cost savings depending on the size and scope of your operation and is dependent on the availability of the insurance market providing separate coverage for those states.
 
Future of Non-Subscriber
 
As this type of coverage becomes widespread, additional states have started to consider moving to a similar model that allows for options beside the Workers’ Compensation system. Oklahoma is among the most recent state to pass legislation and implement the option. Tennessee and South Carolina have recently introduced bills that could allow for a similar structure. 
 
As Workers’ Comp prices continue to rise, there will most likely be additional states looking into providing this type of structure to help their employers reduce costs and provide comparable coverage for injured employees. 
 
At the Gibraltar Group, we offer many services to complement the Non-Subscriber program, making your company prepared in the event of a claim. Services like 24/7 medical triage which provides immediate access to a nurse to decide if the employee should be taken to a hospital or if other treatments are necessary. Additionally, we have claims advocates who manage the entire claims process to help streamline reporting, reduce costs and prevent future loss experiences. The claims process we implement with our clients has proven to be effective for Workers' Compensation and Non-Subscribers alike. Focusing on a proactive approach to reduce your cost of claims and ehancing an enterprise-wide risk management strategy is key to helping your company achieve safety, profitability and sustainability.
 
For more information, please contact one of our advisors:

Justin Crain, jcrain@gibraltarrisk.com
Jeff Anderson, janderson@gibraltarrisk.com

 
 
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