The Workers’ Compensation Reinsurance Association (WCRA) was established in 1979 to provide reinsurance for significant workers’ compensation claims. The Association’s members include traditional insurers and self-insureds. Membership protects insurers and self-insureds against catastrophic losses. Insurers and self-insureds are only responsible for workers’ compensation benefits up to a selected level, which is known as a retention limit. Typically, once the retention limit is reached, the WCRA reimburses its member for any overage.
While not an everyday occurrence, depending upon their amount, workers’ compensation settlements may require WCRA involvement. Failure to involve the WCRA when necessary can have severe consequences. If the WCRA disagrees with the terms of a settlement, the WCRA will only reimburse or apply toward the retention any undisputed settlement amounts. While WCRA members may request a review of the denial of any portion of the settlement reimbursement, it is better to avoid that scenario altogether.
The good news is that inappropriately settling a claim without the WCRA’s agreement is 100% avoidable. The WCRA should simply be notified before parties enter into settlements that may involve present or future WCRA reimbursement. That makes sense considering WCRA money may be in play.
In a recent “Settlement Advisory,” the WCRA provided a detailed list of what it needs to know before evaluating a settlement proposal. That list includes the following:
- Interest in settlement and/or demand from claimant
- Proposed settlement amount
- Detailed exposure analysis
- Any additional information/documentation that will assist WCRA staff in evaluating the proposed settlement
- There are additional considerations if the settlement involves closing medical benefits
As a practical matter, WCRA members [and their attorneys] need to be aware of their retention levels and act accordingly. For the upcoming year, 2027, the four available retention levels, which are known as low, high, super, and jumbo, are $500,000, $1,000,000, $2,000,000, and $5,000,000, respectively. Those levels haven’t changed since 2018, but the associated rates have. For additional information regarding WCRA retentions and rates, you can visit the WCRA’s website here.
Of note, the applicable retention limit for a particular claim is the limit in effect for the year in which the injury occurred.
Also of note, the WCRA does not attend or participate in settlement/pretrial conferences, nor does it sign Stipulations for Settlement.
Also of note, WCRA settlement approvals are typically valid for 90 days.
If you have any questions on workers’ compensation settlements or the WCRA, you can reach me at 763-252-6362, or via e-mail at [email protected].