Tennessee Dissolves Residual Workers Comp Reinsurance Plan

October 19, 2015

The Tennessee Workers Compensation Insurance Plan (TWCIP) reinsurance mechanism has been dissolved as part of the state’s transition to the National Council on Compensation Insurance (NCCI) as the new residual workers compensation administrator, according to a bulletin from Tennessee Insurance Commissioner Julie Mix McPeak.

Former administrator Aon will be liquidating all assets of the TWCIP’s reinsurance mechanism – the Tennessee Aggregate Excess of Loss Reinsurance Mechanism (TAELRM) – the bulletin states.

All additional available funds were distributed by Sept. 30 to participating carriers for plan years Jan. 1, 1998 through June 30, 2015.

“These distributed funds represent cumulative net cash flow on this experience and may not be sufficient to cover all future claims and associated expenses,” the bulletin says.

NCCI’s Tennessee Reinsurance Mechanism (TRM) will replace the dissolved TWCIP reinsurance mechanism, which has been converted to a quota share reinsurance mechanism similar to other NCCI-administered state assigned risk plans.

Insurance companies participating in the TAELRM during the period Jan. 1, 1998, through June 30, 2015, are deemed participating companies in the quota share mechanism. NCCI said on its website it will provide additional information in future communications.

“Going forward, all TWCIP participating carriers will be responsible for quota share adjustments under the TRM for experience on the TWCIP policies with effective dates, January 1, 1998 through June 30, 2015. NCCI will provide quarterly reporting to the TRM carriers,” the bulletin from the Tennessee Department of Commerce and Insurance (TDCI) states.

TDCI previously announced in April that NCCI had been chosen as the new TWCIP plan administrator.

All Tennessee workers compensation residual market policies on and after July 1 are now administered through NCCI under the renamed Workers Compensation Insurance Plan (WCIP).

NCCI has since established the necessary infrastructure to provide workers compensation residual market services, such as application processing and administration of the plan rules, and access to coverage in certain other states.

As of the April announcement, Tennessee was the 23rd state to utilize the NCCI workers compensation residual market system.

In general, most Tennessee employers are under a statutory obligation to obtain workers compensation insurance and provide their employees with medical benefits and compensation for lost wages due to work-related injuries.

NCCI will administer the WCIP for employers who, despite a good-faith effort, are unable to procure workers compensation insurance in the voluntary market.

NCCI is a nationwide source of workers compensation insurance information. NCCI gathers data, analyzes industry trends, and prepares objective insurance rate and loss cost recommendations.