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About the WCRA
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 | The Minnesota Workers’ Compensation Reinsurance Association (WCRA) was created by
the State Legislature in 1979. Minnesota law requires all insurers and self-insurers
to purchase workers’ compensation reinsurance by becoming members of the WCRA.
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How
Does The WCRA Work?
Workers’ compensation reinsurance is
designed to protect an insurer or self-insurer against catastrophic losses from
work-related injuries. The insurer or self-insurer is responsible for indemnity
and medical benefits up to a selected deductible level, or “retention limit.” Customarily,
once that retention limit is reached, the WCRA reimburses the insurer or self-insurer
for all statutory benefits above that limit. WCRA coverage applies only to Minnesota
jurisdiction claims, and claim costs are covered on a per-occurrence basis.
The
WCRA offers three retention limits from which the member may select. The retention
levels are indexed to Minnesota wage costs, and are updated each year as part of
the rate determination process. (For current and historical retention limits, download
the WCRA Retentions, Prefunded Limits, and Approved Rates information.)
The WCRA
charges reinsurance premiums based on actuarial projections of the number of catastrophic
injuries that are likely to occur in Minnesota's workforce each year, together with
estimates of the costs of these catastrophic injuries. The WCRA Board of Directors
annually establishes premium rates that are designed to produce enough premium dollars
that, together with investment earnings over time, are sufficient to reimburse WCRA
members for their catastrophic claims that exceed their chosen retention limits.
Claim reimbursement payments by the WCRA continue for the life of the claim, which
can be as long as 70 years.
As a tax-exempt, nonprofit association, the WCRA is
able to charge very low reinsurance premiums because the Association has no marketing
and underwriting expenses, pays no taxes, and does not need to make a profit. Further,
if the WCRA generates more surplus than is necessary to meet the long-term obligations
to members, that surplus is returned to the members and Minnesota employers.
In
addition to providing reinsurance protection, the WCRA claims and rehabilitation
staff assists members in meeting their workers' compensation responsibilities by
identifying cost-effective treatment and rehabilitation services and loss reduction
opportunities.
WCRA Management
While state law created the WCRA, it is not a state agency and has
never received any state appropriations to fund its operations. It is governed by
a 13-member Board of Directors, including the Commissioner of Finance and the executive
director of the State Board of Investment; five members appointed by the Commissioner
of Labor and Industry (two employer representatives, two employee representatives,
and a public member); four insurer representatives elected by insurer members from
candidates approved by the Commissioner of Labor and Industry; and two self-insurer
representatives elected by self-insurer members from candidates who are also approved
by the Commissioner of Labor and Industry. A full-time staff of 27 employees manages
the business of the Association, including general reinsurance administration, claims
handling and rehabilitation, actuarial and financial functions, and information
services.
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