A significant benefit of a self-funded workers’ compensation pool, such as KERIT, is the financial advantage to members. Unlike traditional insurance providers, a pool allows members to capture a portion of investment income
Consider the plight of a city or county that does not belong to an insurance pool: the government buys coverage through a private insurer, at rates set by the state. The premium pays for the losses, overhead and reinsurance costs of the insurance company. The company invests what’s left, earns investment income and keeps the profit.
A member of an insurance pool, on the other hand, saves money in two ways. Members pay reduced premiums, and state law allows the trust to grant discounts off the standard premium a city or county would normally pay to a private insurer. Members also receive dividends, that portion of the trust’s premiums and investment income remaining after the trust has paid claims and operating costs.
The Trust has completed its twenty-ninth year of pooling workers’ compensation coverage. BKD LLP, KERIT’s independent auditors, recently presented their report on KERIT’s December 31, 2015 financial statements at the May 10, 2016 Board of Trustees’ meeting.
Since inception, the members have accumulated over $25.3 million in benefits as shown below. KERIT’s cumulative performance since inception remains outstanding with a 36 percent return.
As a result of its success, KERIT is able to refund premiums to members each year. The Board will consider additional refunds at their August meeting.