Participants in the AGC Retro Program are receiving refunds up to 70 percent this year. In what has become an annual occurrence, the AGC Retro group performance is a top performer compared to other workers’ comp retro plans.

“We have a lot to celebrate this year,” said Lauren Gubbe, AGC Retro Program Director. “We are handing out refunds of at least 60 percent to 138 member firms, with 105 companies at or over 65 percent. Our 31 top performers are actually taking home 70 percent refunds!”

The AGC Retro Program achieved 100 percent retention last year despite some creative marketing by competing Retro plans.

“The vast majority of our new members come from competing plans and they tell me they are glad to have hands-on help with safety, light duty return to work, claims management, and their efforts to reduce their future experience rate,” said Gubbe. “We don’t see people returning to the plans they left nor do we see people leaving us as we have enjoyed a 99 percent retention rate for the last 4-5 years.”

“We continue to do things the right way and get great results,” said Van Hardy, AGC Treasurer and longtime Retro Committee chairman. “There are competing groups who pay consultants and brokers for referrals and some have goosed up numbers to provide refund quotes. Last June I saw a quote from our fiercest competitor that had premiums inflated and losses drawn down such that the refund was overstated by approximately $2.7 million. In addition, that quote was based on a gross refund prior to the group’s expenses and fees being taken out of the equation as they would be prior to the refund distribution.”

The AGC Retro Program has grown to be a $30 million group averaging 60 percent individual refunds. In 10 of the last 14 years firms have earned 50 percent or more back, in seven years it has been 60 percent or more, and in five years top performers have received back refunds between 67-75 percent,” said Van Hardy, AGC Treasurer and longtime Retro committee chairman. “The refund performance is particularly impressive when you consider that 78 percent of our members have lower than average experience rates due to their commitment and investment in safety and light duty, as well as the help they receive from AGC.”

Gubbe and Hardy have advice for potential participants to help them distinguish between the solid principles of the AGC Retro Program and the misleading promises of others.

“Most people don’t know that there is no oversight with regard to Retro refund quotes groups provide since workers compensation is excluded from standard insurance regulations in this state,” Gubbe said. “I encourage people to ask for a real spreadsheet that shows the group premium and developed losses, the plan expenses taken out, and their refund calculation as compared to the other firms in the group. The group can always black out confidential information. Since there is no oversight on marketing, this would help to validate a quote. Interestingly enough of the 20 or so new members we take in every year, we get questions from them with regard to their prior group’s refund calculation as they apparently don’t get a spreadsheet.”

Hardy added, “People should ask: 1) Is the quote based on actual Labor and Industries premiums, claim developed costs, and refund as stated by the Department? 2) Is this quote based on the gross refund or the net refund after the 10-20% fees are taken out? 3) What is the underwriting criteria to get into the group? 4) How is the integrity of the group protected? Is there a safety jobsite and paperwork audit to ensure firms are compliant with LNI regulations? Are firms put on notice for performance? Are firms ever disqualified? 5) Is there a minimum premium requirement or a requirement that companies be in business for at least 3 years? 6) What is the formula for distributing the refund? Is interest income included? Do firms that reduced the refund also get to receive a refund; if so, how do you tell a company they are disqualified if they have received a refund every year? 7) What risk of penalty is the group taking?”

Bottom line, says Gubbe, “Refund performance is based on the developed losses the claims have and the premiums paid in a particular period; so year for year refunds are going to be different. In addition, the Department doesn’t have a static calculation; but they actually change the performance adjustment factors and loss development factors to hit the number they want to have to distribute among all groups. The real question should be what do you take home when the day is done and the group does whatever it does with regard to refund calculations, expenses, etc., in addition to, who do you want to affiliate with,” said Gubbe. “I am proud to be associated with AGC and the members we represent. I am also glad I don’t have pressure to change the way we provide refund quotes or market the program. Our members and staff should be proud as we have a longtime track record of being a top performing Retro group!”