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Self-Insured Employers Assumption of Liability Policy

Self-Insured Employers

Under Workers’ Compensation Law § 50(3) a former self-insured employer may request to execute a loss transfer agreement, known as an Assumption of Liability Policy (ALP), when a Workers’ Compensation Board (Board) approved private insurance carrier agrees to assume full liability for all remaining self-insured claims of the employer. Such policy must be in a form approved by the Superintendent of Insurance and issued for a single complete premium paid in advance by the employer. The Board must determine the amount of the policy and it cannot be cancelled for any cause.

Former self-insurers with outstanding liability from their period of self-insurance who wish to obtain an ALP must obtain approval from the Board to purchase an ALP. If approved, the Board will work with the employer and the approved insurance carrier during this process. The Board will need to approve the agreement between the employer and insurance carrier and direct the insurance carrier to file the necessary forms and obtain approval from the Department of Financial Services.

At the time of the transaction, the former self-insurer must pay an exit fee and guarantee fee and the Board releases the collateral held as security deposit for the employer. The employer can use the collateral to assist in the purchase of the transaction. A mutual agreement is signed by the Board and employer to release the employer from any future assessments and the employer agrees not to seek any recoveries or reimbursements for amounts previously paid as assessments.

Once the ALP is executed, the employer is no longer liable for the self-insured claims. All claims during the policy period (period of self-insurance) are the responsibility of the insurance carrier issuing the ALP. The claims are re-indexed to the new insurance carrier.

For more information on Assumption of Liability Policies, please email the Office of Self-Insurance at selfinsurance@wcb.ny.gov