Why Is My Workers' Compensation in the Assigned Risk Pool? Understanding Workers' Compensation and the Assigned Risk Market

If you recently purchased workers' compensation insurance and found yourself placed into the Assigned Risk Pool, you might be wondering why — and what it means for your business.

You’re not alone, and the good news is: it’s often just a stepping stone. Let’s break it down.

What Is the Workers' Compensation Assigned Risk Pool?

The Assigned Risk Pool (sometimes called the "Residual Market") is a state-managed safety net designed to ensure that businesses can get workers' compensation insurance when they can't secure coverage through the standard insurance market.

Workers' compensation is legally required in most states. If no insurance company is willing to voluntarily insure your business, the state assigns your policy to a carrier through this program.

Why Was My Business Placed in the Assigned Risk Pool?

Several reasons could land a business in the assigned risk pool:

1. New Business Without Claims History Insurers prefer a proven track record. Without claims history, new businesses are harder to evaluate and often placed into the pool.

2. High-Risk Industries Businesses in sectors like construction, roofing, transportation, or manufacturing face higher injury risks, making insurers more cautious.

3. Poor Claims History A history of frequent or severe workers' comp claims can make it difficult to find a willing insurer in the open market.

4. Small Payrolls Very small businesses sometimes struggle because small payrolls result in lower premiums, making them less attractive to insurers.

5. Coverage Lapses If your business has had a break in coverage due to non-payment or other reasons, insurers may view you as a higher risk.

What Does It Mean for Your Business?

• Coverage Guaranteed: You are still protected, meeting state workers' compensation laws.
• Higher Premiums: Assigned risk policies typically come with higher rates compared to standard market policies.
• Limited Flexibility: These policies are often stricter, with less room to negotiate terms or pricing.

How to Move Out of the Assigned Risk Pool

Being in the assigned risk pool isn't permanent. Here’s how you can move back into the standard insurance market:

• Maintain a Clean Claims Record: Focus on safety and training to minimize incidents.
• Establish a Strong History: After 2–3 years without major claims, insurers are more willing to work with you.
• Work With a Knowledgeable Agent: A specialist can help you find opportunities you might not see on your own.
• Avoid Coverage Gaps: Always pay on time and renew early.
• Highlight Your Safety Programs: Insurers appreciate proactive businesses with formal safety practices and OSHA compliance.

Partner with an Expert Who Can Help

If you’re unsure about your workers' compensation situation — or want a plan to get out of the assigned risk pool — Kimberly L. Johnson, CPIA, CRIS, QCLS, PCIA, AILP at The Hills Insurance Agency, Inc. is here to help.

Kimberly specializes in workers' compensation solutions for businesses of all sizes and industries. With her expertise, you’ll get personalized guidance to improve your risk profile, explore better coverage options, and potentially lower your premiums over time.

Don't settle for higher rates forever. Call Kimberly L. Johnson, CPIA, CRIS, QCLS, PCIA, AILP today at The Hills Insurance Agency, Inc. and start building a better path forward for your business.