Assigned Risk Pool

The assigned risk pool — also called the residual market or involuntary market — exists as a safety net for employers who cannot find workers' compensation coverage from any private carrier. Every state requires employers to carry workers' comp (with limited exemptions), so the assigned risk pool ensures no employer is left without the legally required coverage. Carriers writing workers' comp in the state are required to participate in the pool proportional to their market share.

Tree service companies are frequent occupants of the assigned risk pool, particularly new companies without a track record, companies with poor loss histories, and very small operations that do not generate enough premium for carriers to find profitable. If every carrier your agent approaches declines your workers' comp account, the assigned risk pool is your backstop.

Coverage in the assigned risk pool is typically more expensive than the voluntary market — often 15-25% higher — and the terms may be less flexible. You will pay the manual rate for your classification code without the competitive discounts that voluntary market carriers sometimes offer. Additionally, assigned risk policies are often subject to mandatory safety inspections, and the pool may impose premium surcharges for adverse loss experience.

The goal should be to get out of the assigned risk pool as quickly as possible. After one or two clean policy years with no claims, your agent can re-approach voluntary market carriers with your improved loss history. Investing in documented safety programs, employee training certifications, and a formal return-to-work program makes your account more attractive to private carriers. Most tree service companies can transition from the assigned risk pool to the voluntary market within two to three years if they manage their claims aggressively.