North Dakota Cross Border Strategies. Tim Wahlin Chief of Injury Services, WSI, ND

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1 North Dakota Cross Border Strategies Tim Wahlin Chief of Injury Services, WSI, ND

2 North Dakota Cross Border Strategies Unique ND challenges One of the last true Monopolies Massive growth over the 4 years GEP 10 $153M GEP 13 $310M Significant Rate differences Lowest Rates last 7 years and 50% dividend on top As far as I can tell they are all from your states

3 North Dakota Cross Border Strategies ND has authority for Reciprocal Agreements NDCC The organization may enter into agreements and Where such an agreement exists, any provisions of this chapter which conflict with the provisions of that agreement are superseded by the provisions of that agreement.

4 North Dakota Cross Border Strategies Existing Reciprocity Agreements State Date Key words or phrases Exclusion Length of Exposure Not to exceed 6- Wyoming On occasion, -temporarily N/A months -temporarily, -covers only workers who's usual Montana 2007 employment is in Montana, -canceled at the discretion of either state, Idaho -On occasion, -while working temporarily, certificates of ET shall be issued, or cancelled, at the discretion of WSI N/A -Temporarily working, -temporary employment, -will issue when appropriate, -may cancel certificates at any time, -employers who conduct operations on Washington 2001 occasion, while working temporarily,- certificates of N/A ET coverage shall be issued, or canceled, at the discretion of WSI, -employers who conduct operations on occasion, - SD 1968 who are working temporarily -on occasion, -while employer has temporary Oregon 1990 workplace, -certificates of ET coverage shall be issued, or canceled, at the discretion of WSI, -on occasion, -while working temporarily, - Utah 1969 certificates of ET coverage shall be issued, or canceled, at the discretion of WSI, Montana excludes construction trades (NAICS Sector 23) Construction or maintenance of interstate structures such as dams, bridges, trestles, etc between ND & SD N/A N/A 12-months None noted None noted None noted None noted None noted

5 North Dakota Cross Border Strategies Each agreement presents its own issues They must take into account other JX s authority Only for temporary coverage Imperfect solution, but best available

6 North Dakota Cross Border Strategies Current North Dakota Requirements Require max timeframes Only cover employees whose place of employment is within the JX Mirror the issuing state coverage limits

7 MT EXTRATERRITORIAL ISSUES Kevin Braun Assistant General Counsel Montana State Fund

8 Extraterritorial Coverage Statutory test for residents and nonresident workers for MT coverage. Residents: employment duties primarily carried out or controlled in MT. Nonresidents: principal employment duties are conducted in MT on a regular basis. If the nonresident does not meet the preceding test, coverage can exist if the employer elects coverage and the employers employees are hired in MT, paid wages in MT, supervised in MT and the employers business records are maintained in MT. Nonresident employees of an employer from another state in the construction industry.

9 Extraterritorial Coverage Cont d MT employers who are temporarily in another state may have their coverage follow them. Temporarily is the issue as that term is not defined in statute. For example a bus driver who was reassigned to drive a different route out of state for an indefinite period of time was found to be temporarily in another state even though there was no return date identified nor was it certain that the worker would return to MT. McGaha v. Greyhound Lines, Inc., 735 P.2d 521 (1987).

10 Extraterritorial Cont d Reciprocal Agreements. Statute allows MT to enter into reciprocal agreements with other states. Currently in place with ND, SD, OR, ID, WA, NV, WY and UT. Reciprocal Agreements allowed if: WC coverage is in place from the originating state; The coverage applies while the worker is in MT; and MT coverage and the exclusive remedy is recognized in the other state.

11 Extraterritorial Cont d Friction Points Matters of state law. MT requires MT coverage for out of state employers engaged in the construction industry. HB 82 addressed that and allows coverage to follow in the construction industry if specified in the reciprocal agreement. ND substantial contact test (25% or more of an employee s annual pay or an employer s annual payroll earned/paid in ND, then ND coverage is required absent a reciprocal agreement). Result is the potential for dual coverage with employers paying premium twice for the same work and the potential for double benefits. Reciprocal agreements can provide a means of dealing with some of the problems created by state law.

12 Extraterritorial Cont d Reciprocal agreements are not the perfect answer as they are limited in duration and situations exist such as nonresidents working for a MT employer in another state. Policy Considerations: Nonresident endorsement. OSC program (other states coverage program for MT employers with a base of operations in other states. Written as two policies one that is MT specific and a separate policy on Zurich paper and covers the other state).

13 Overcoming the Challenges of Extraterritorial Issues Ralph Gifford Underwriting Manager and Technical Advisor Missouri Employers Mutual

14 Overcoming the Challenges of Extraterritorial Issues NCCI Extraterritorial Classification Guidelines Construction and Trucking Risk Guidelines only and used only for determination of premium when no company guidelines have been established for this purpose.

15 Overcoming the Challenges cont d We do not have the ability to provide complete Other States Insurance coverage as contemplated under item 3C of the Information page. Item 3C on the Information page, which relates to Other States Coverage, is shown as none or we may have a special endorsement to provide some type limited coverage for temporary and incidental operations in other states.

16 Overcoming the Challenges cont d Many of the AASCIF state funds use the state of hire as the first determining factor. Underwriters should confirm that the employees are being physically hired in the state. Even though an offer of employment is made over the phone to an applicant who lives in another state, the employee should physically come to the state of hire to sign final paper work, complete W-2 s, or other necessary items before they are actually put to work or allowed to drive for the employer.

17 Overcoming the Challenges Construction Risks cont d Payroll of employees of contractors who have their place of business in a given state and operate in adjoining states and who are constantly crossing state lines are usually assigned to their headquarters state. Payroll of employees who are hired for a specific job are assigned to the state where the job is located. Missouri Examples: 8 adjoining states mainly Kansas and Illinois. No reciprocal agreements.

18 Overcoming the Challenges Trucking Risks cont d The Extra-Territorial guideline for determining state assignment is location of the Base Terminal. The Base Terminal definition is the location from which the business loads, unloads, stores or transfers freight on a regular basis. Many of the smaller operations do not have this type of terminal, but only have dispatchers and/or possibly maintenance facilities.

19 Overcoming the Challenges cont d Trucking Risks cont d The next two guidelines in the NCCI Manual include the majority of driving time in a specific state and if none of the above applies, the state of residence is that of the trucker. Some of the trucking companies may have specific routes in specific states, but this is fairly rare, especially with the long haul trucking risks. Except for some of the larger states like Texas and the western U.S., most long haul truckers could pass through several states in one day.

20 Overcoming the Challenges Trucking Risks cont d cont d The state of residence of the trucker could be used, but in this day and age of high tech communication, a trucking firm could have long haul trucking employees living in several different states and probably should only be used as a last resort.