Differences Between Property and Workers' Compensation Exposure Data

Workers' compensation policies and certificates require special consideration at the policy/certificate and location levels. Differences between property exposure data and workers' compensation exposure data include the following:

• Exposure base: With property exposures, the exposure base is the replacement value. With workers' compensation, the exposure base is the number of employees.

• Workers' compensation medical and indemnity payments: Exposure data can include expected medical and indemnity payments for different types of injury and for the time employees are expected to be working. The models can use default values, which include both medical and indemnity (wage) losses. These are industry default values, as are the employee counts. Clients can include their own estimates of average medical and indemnity costs and employee counts, which then override the default model values. Workers' compensation losses always include medical and indemnity (wage loss) estimates.

• Workers' compensation exposure data, which must be included in the location file:

  • Location details, including address, construction type, and building height, and, for the earthquake peril, occupancy and primary risk characteristics.

  • Number of covered employees at the location. In addition, the data can include payroll and average wage, which Touchstone can use to derive the number of employees (by dividing the annual payroll by the average annual wage). The annual payroll must be greater than or equal to the average annual wage.

  • Expected values of medical and indemnity payments for different injury levels, including death, or the model can use defaults.

  • Percent of employees working day, evening, and night shifts, or the model can use defaults. The injury defaults vary by state, and the shift percentages vary by occupancy, according to industry estimates. To view the defaults, open the Administration Console, select Loss Defaults, and then select Wages and Benefits. See Shift and Injury Type Definitions for information about the definitions.

• Perils: Earthquake and Terrorism are the only available perils for U.S. workers' compensation exposures. Earthquake and Tsunami are the only available perils for Japan PA (Personal Accident).

• Terms: Limits and deductibles cannot be applied at the location levels; policy terms are entered using the contract record.

• Reinsurance: Surplus share and quota share treaties are available for workers' compensation exposures. For excess policies, you can define a primary limit, participation, and retention that apply across locations. If there is statutory coverage, add an additional layer to account for this exposure.