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.