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Waiver of Subrogation Endorsement by P_Gallo

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									Waiver of Subrogation Endorsement
Subrogation (and Waiver)

Explanation of the legal concept of subrogation and its presence in workers
compensation rules.

Right to Recover
A carrier has a right to recover claims paid from anyone liable for an injury
covered by the policy. For instance, a worker is injured in a traffic accident and
the carrier pays workers compensation benefits to him. The accident was caused
by another driver. The carrier can recover the costs of the claim from that driver.
This legal action is what we call "subrogating a claim."

Waiver Summary
Endorsement: Waiver of Our Right to Recover From Others Endorsement (WC 00
03 13)
Premium Charge: 5% or $250 minimum (mandatory for assigned risk, optional
for voluntary)
Stat code to report premium charge: 0930
Waiver
Waiver of subrogation means the carrier gives up its right to recover from others.
This is usually done because the insured does business with a third party, like a
government entity or general contractor, and that third party requires the
insured's carrier to waive its right to subrogate against the third party. The carrier
uses the Waiver of Our Right to Recover From Others Endorsement (WC 00 03
13). If the carrier decides to charge premium for the endorsement (even on an
individual risk basis), it must file that charge with the Indiana Department of
Insurance. The ICRB has no charge (rate) filed on behalf of its members for the
waiver. However, the standard endorsement is already filed and ready for use.
The statistical code number is 0930. If the carrier makes no charge, then no filing
is necessary

Waiver in Residual Market


For assigned risk policies, the endorsement is available if required of the insured
by contract. Plan rules require a copy of the signed contract on file with the
servicing carrier. From a practical standpoint, it is okay for the servicing carrier to
issue the waiver of subrogation for an insured's policy with an unsigned contract
on file. The unsigned contract can be faxed to a servicing carrier's office. Within a
reasonable time after the endorsement is issued (example, ten days), the
insured/agent should furnish a signed copy of the contract to complete the
carrier's file and satisfy Plan rules.
Effective 10/1/94 in Indiana, the premium charge is 5% of the manual premium
developed in conjunction with the work for which the waiver is provided, or a
$250 minimum premium (per Item Filing W-8015). This charge is explained in the
NCCI Basic Manual Indiana Assigned Risk Special Rules (green pages), Workers
Compensation Insurance Plan Supplement, Additional Coverages Under the WCIP,
1.d.
For an employer that may engage with multiple contracts with the same party
during a policy year, it may be possible to charge just one waiver of subrogation
minimum premium for those contracts, or the 5% of manual premium charge,
whichever is greater. The servicing carrier and the ICRB would look at the
situation and make a decision.
Experience Rating Revisions
We can revise up to the five most recent modifications for a given risk as a result
of a carrier's successful subrogation of a claim. Reference ER Manual Part Two,
D.4, page 6.

Attorney Fees
1. When carriers incur attorney fees related to a subrogation recovery, those fees
are considered recovery expenses and subtracted from the total recovery and are
reported as part of the claim on the unit stat report.
2. When carriers incur attorney fees related to a second injury fund recovery,
those fees are not considered recovery expenses and are not subtracted from
the total recovery and are not reported as part of the claim on the unit stat
report.

A simple example would be:
$100,000 original claim
$100,000 successful subrogation, carrier reimbursed for full amount of claim
$ 30,000 attorney fees expended to successfully subrogate claim (recovery
expenses)

So, carrier would report $30,000 as the claim amount on unit statistical report
after the subrogation

Reference Unit Statistical Plan Manual, Part IV, rule 14. Subrogation. Rule 14 of
the Manual which deals with subrogation states that the reported loss may
include recovery expenses. We should not confuse rule 14 with rule 11 of the
Manual (reference Unit Statistical Plan Manual, Part IV, rule 11. Expenses
Excluded From Losses). Rule 11 addresses direct claims (not subrogated claims).
Under rule 11, attorney fees expended in a claim for the benefit of the carrier are
not included as part of the cost of a claim.

								
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