Retailers Casualty Insurance Company’s board of directors has approved a $2.5 million distribution for policies with initial effective dates in 2022.
The company announced that distributions have been issued to qualifying policyholders based on their premium and loss ratio, with those maintaining a lower loss ratio receiving a higher return.
Policyholders with zero losses are eligible for a maximum distribution of 21.3% of their normal premium. Eligibility is subject to minimum requirements, and future distributions will be determined at the board’s discretion.
Board chairman Frank Brame said the distribution rewards those who prioritize employee safety.
Established in 1988, Retailers Casualty specializes in providing workers' compensation coverage to over 2,200 businesses across Alabama, Arkansas, Louisiana, Mississippi, Oklahoma, and Texas. The company is managed by Summit Consulting LLC, which provides underwriting, policy administration, claims management, and loss prevention services.
Workers' comp policyholders can receive dividends based on their premiums and loss ratios. These dividends are essentially a return of a portion of the premium, contingent upon favorable loss experience and the insurer's financial performance.
In a flat dividend plan, policyholders receive a predetermined percentage of their premium as a dividend, regardless of their individual loss experience during the policy period.
For example, if a policy has a 4% flat dividend and the premium is $10,000, the policyholder would receive a $400 dividend, irrespective of any claims made.
Sliding-scale dividend plans, on the other hand, are loss-sensitive, meaning the dividend amount varies based on the policyholder's loss ratio – the ratio of incurred losses to earned premiums. Generally, a lower loss ratio results in a higher dividend.
For instance, with a premium of $10,000, a loss ratio under 10% might yield a 5% dividend ($500), while a 50% loss ratio could reduce the dividend to 2% ($200).
What are your thoughts on this story? Please feel free to share your comments below.
