Our practice occasionally receives money back from our workers’ compensation carrier. How can we tell if this is a dividend or return of excess company profits or premium?
Workers’ compensation carriers operating in Florida are required to inform their insured clients of any applicable dividend plans that coincide with the coverage. Due to the fact that this is a benefit being offered by the carrier, most of them announce their dividend programs in a clear and concise manner.
Dividends are usually based upon the loss ratio of an individual practice or a group of practices or members that are insured through an established program. The dividends are not guaranteed and must meet eligibility requirements in order to be issued by the carrier. Reputable companies usually announce the dividend.
In recent years, we have seen a number of large, well-known carriers being forced by the insurance commissioner to return excess profits to their policyholders. In many cases, and not surprisingly, these funds have been returned without explanation.
Reputable carriers with dividend programs return excess profits voluntarily without being forced to do so by the state.
Always remember to check with your independent agent for details regarding dividend programs and demand them in writing.
Tom Murphy is a workers’ compensation and medical malpractice insurance specialist agent with Danna-Gracey, Inc., an independent insurance agency based in downtown Delray Beach with a statewide team of specialists dedicated solely to insurance coverage placement for Florida’s doctors. He can be reached at (561) 276-3553 or (800) 966-2120 or [email protected]