Date: January 2016
MCIT shares the following information with members because frequently they are asked to enter into contracts that contain waiver of subrogation provisions. In most cases, MCIT asks members not to jeopardize the right to recover damages from a negligent party.
Appropriate reinsurance to cover catastrophic claims and a successful subrogation program are an important part of maintaining the fiscal health of MCIT. Like any standard Workers’ Compensation policy, the MCIT Workers’ Compensation Coverage Document contains a condition designed to protect the right of subrogation and the ability to recover a loss.
The Recovery from Others Provision states: “We [MCIT] have your rights, and the rights of persons entitled to the benefits of this coverage, to recover our payment from anyone liable for the injury. You will do everything necessary to protect those rights for us and help us enforce them.”
MCIT is reinsured against catastrophic workers’ compensation claims through the Workers’ Compensation Reinsurance Association (WCRA). The WCRA requires MCIT to pursue subrogation of claims unless they have agreed otherwise. According to the WCRA Plan of Operation, Article VI (H), “Each member (MCIT) shall, to the extent permitted by law, prosecute or intervene in any and all claims the member or an employer, employee, beneficiary or other person may have against any third party arising out of any Loss Occurrence. A member may waive its subrogation rights in writing in advance of any Loss Occurrence.”
With respect to workers’ compensation, MCIT cannot approve waiver of subrogation language in contracts due to WCRA guidelines. Upon request, the WCRA will review and consider for approval pre-loss waivers of subrogation, depending on the risk.
For prior approval, MCIT must provide to the WCRA the basic facts of the contract and circumstances of the waiver of subrogation provision. If approved, MCIT will receive a confirmation notice from the WCRA.
Members should contact their MCIT risk management consultant if they have additional questions regarding this topic.