Purpose of a Workers' Compensation Dividend Program

A workers’ comp dividend program is a participating policy that lets you share in your carrier’s profits. If your claims stay low, the carrier may return a percentage of your premium after the policy ends, which gives you a financial reason to invest in workplace safety. Eligibility depends on the carrier. Both small and large accounts can qualify, but plans are usually limited to certain states and types of business, and many carriers require a minimum premium. You also have to meet the plan’s conditions, such as cooperating with the final premium audit, making on time payments or you could lose the dividend. Markel, Benchmark, Travelers, FCBI and many more carriers offer dividend plans, and availability varies by state.

Dividend programs come in two main types. A sliding scale plan connects your payout to your claims history. The lower your losses compared to your audited premium, the larger the dividend. A flat dividend pays a fixed percentage of your audited premium and doesn’t change with your loss experience. Neither type is guaranteed. The carrier’s board of directors decides each year whether to declare a dividend, which happens after your policy expires, so a weak year for the carrier can mean no payout even when your own claims were low.

Ask your agent for the plan’s exact terms before you count on the money.