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 four retention levels from which the member may select. The retention limits are indexed to Minnesota wage costs, and are updated each year as part of the rate determination process. Find current and historical retention limits and rate here.

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 may 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 25 employees manages the business of the Association, including general reinsurance administration, claims handling and rehabilitation, actuarial and financial functions, and information services.