Employer carve-out organisation (ECO) Samuel Hale is set to form a captive to insure its US$50 million workers’ compensation risk, effective 1 July.
The new captive will be fronted by Arch Insurance.
Based in California, the ECO protects businesses in the state from excessive and unpredictable employment costs arising from fraud and litigation.
The state of California has a very high litigation rate on workers’ compensation insurance claims relative to the rest of the US, making it one of the most expensive states for workers’ compensation premium.
Carve-outs allow approved entities to handle their claim disputes through alternative dispute resolution. These compensation claims are settled quicker, and allow insurers to avoid the immense costs of the slow legal system.
Commenting on the new captive programme, CEO Michael DiManno says: “We have been working toward this for the last six years. The captive arrangement will enable us to maximise the advantages of our carve-out agreement which drives the economics of our business.
“This captive gives us a 10-year horizon on workers' compensation, which creates long-term stability for our customers in a very shaky financial climate. We now have maximum control over our programme and can deploy the best cost-containment services based on our specific needs.”
