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Workers' Compensation Insurance

Workers Comp Dividend Plans

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Martin Summers

Insurance Agent

Dividend plans are used on workers’ compensation policies as a way to lower premium. Since the Florida workers’ compensation rates are determined by the Office of Insurance Regulation, it is hard for many insurance carriers to compete with each other on price. One way in which they can do this is through dividend plans.

Dividend plans are also a great way a great way to align to goals of the insurance company and the insured business to prevent and control workers compensation claims. These plans motivate employers to keep a safe working environment and to manage risks for their employees. In return for successfully accomplishing this goal, employers are returned a percentage of their premium after the policy period. Many workers’ compensation carriers will offer dividend plans to insureds that have surpassed a minimum premium amount and have minimized their losses. Dividend plans are a great opportunity for all types of businesses to lower their insurance expenses spent on workers comp premiums. We have access to carriers that offer dividends that will return up to 40% of the premium to your company if claims are prevented for an entire policy period.

The two most common types of dividend plans available are a flat-dividend plan and a sliding-scale dividend plan. A flat-dividend plan returns a flat percentage of the premium back to the eligible policies. Under a sliding-scale dividend plan, the size of the dividend returned depends on the insured’s loss ratio. The lower the loss ratio is at the expiration date; the higher the dividend payment will be.

It is important to point out that dividends cannot be guaranteed. Dividends are not paid out until the end of the policy and the rate has to be declared by the insurer’s board of directors. The board of directors occasionally will reduce dividends and they also have the ability to declare no dividends at all. This is why it is important to look at the rating or financial strength of the insurance company.

Once again, an employer who implements proper safety training and procedures and manages employee risk will over time minimize losses, which potentially can result very high dividend payouts.

We represent quite a few workers compensation companies that are offering some wonderful dividend plans. Contact one of our workers comp insurance agents or complete our easy online quote form to allow us the opportunity to see which dividend plans are available for your business.

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