RENO, Nev., Jul 25, 2011 (BUSINESS WIRE) -- Despite multiple self-insured group (SIG) failures across the country over the past several years, the majority of small businesses (53 percent) report they have little or no knowledge of how SIGs work according to the recent Small Business Opinion Poll conducted by ORC International commissioned by EMPLOYERS(R), America's small business insurance specialist(R). In addition, 41 percent of current and former SIG member small business decision-makers don't realize they are in fact financially responsible for the workers' compensation claims of all the companies in their SIG - often for years - not just their own businesses.

The latest EMPLOYERS Small Business Opinion Poll reveals an increasing trend of misunderstanding about SIGs as 40 percent of small businesses incorrectly believe that SIG members are not financially responsible for claims of all companies in the SIG compared to 32 percent in the same 2008 poll.

"While large global corporations today continue to report strong profits on increased productivity, America's small businesses continue to face challenges to growth, remain wary of hiring and naturally must closely evaluate business expenses," said Douglas D. Dirks, president and chief executive officer of EMPLOYERS. "While close and continuous examination of costs is smart business, many small businesses are lured by self-insured groups' promises of lower costs, which unfortunately expose them to increased risk. It's important that small business decision-makers understand the collective financial risk and liability they inherit should other group members default, leave the group or if the group is forced to close."

Additional Insights from the EMPLOYERS Small Business Opinion Poll:

• Less than half of current and former SIG members (43%) were aware of the financial requirements to leave a SIG (reinsurance, bond or letter of credit)
• 31% of current and former SIG members don't believe they would be financially responsible for all claims occurring during their membership, even after leaving a SIG
• 34% of current and former SIG members incorrectly believe they can only be sued for a portion of the claim costs owed by the group
• 32% of all small business decision-makers polled don't believe that individual SIG members can potentially be sued for the complete workers' compensation claims costs owed by the group
• Small businesses with one to four employees are the least knowledgeable about SIG-related risks

Selecting Workers' Compensation Coverage

When selecting a workers' compensation company, upfront cost is certainly important, but it's also important for businesses to consider long-term cost savings that can be achieved through value-added programs such as loss control, anti-fraud and return-to-work programs. Price logically serves as a deciding factor in many day-to-day business circumstances, but when it comes to insurance, a workers' compensation provider's focus on safety, fraud, managed care and ability to execute a three-point contact between the employer, injured worker and physician provide added value that better protects businesses for the future.

Following are questions businesses should ask when selecting workers' compensation coverage and if they are already a member of or are considering leaving a self-insured group.

Nine Questions Businesses Should Ask Their Self-Insured Group Administrator:

1. How well funded is my self-insured group?

2. How many claims have occurred while my company has been a member?

3. What is the expected lifetime cost of each of these claims?

4. What does "joint and several liability" mean to my business?

5. What is my company's exposure if another member of my self-insured group has a claim?

6. Can a claimant sue my company for the full cost of a claim?

7. What liabilities does my company have if I leave my self-insured group?

8. What are the legal requirements of leaving a self-insured group?

9. Will I need to reinsure any costs related to claims that occurred while I was part of the self-insured group?

About the Small Business Opinion Poll

The study commissioned by EMPLOYERS surveyed 500 owners or managers of small businesses with 1-99 full-time employees. Data was collected through telephone interviews during the period May 3 - May 12, 2011 at the 95 percent confidence level. The sample is stratified across business size and industry grouping, including manufacturing/construction, transportation/ communication, wholesale/retail, financial services, or personal/professional services businesses. The survey was conducted by ORC International, an Infogroup company through their Small Business CARAVAN.

About Employers Holdings, Inc.

Employers Holdings, Inc. (NYSE: EIG) is a holding company with subsidiaries that are specialty providers of workers' compensation insurance and services focused on select small businesses engaged in low-to-medium hazard industries. The company, through its subsidiaries, operates throughout the United States. Insurance is offered by Employers Insurance Company of Nevada, Employers Compensation Insurance Company, Employers Preferred Insurance Company, and Employers Assurance Company, all rated A- (Excellent) by A.M. Best Company. Additional information can be found at: http://www.employers.com.

Copyright© 2011 EMPLOYERS. All rights reserved. EMPLOYERS(R) and America's small business insurance specialist.(R) are registered trademarks of Employers Insurance Company of Nevada.

SOURCE: Employers Holdings, Inc.

Employers Holdings, Inc.
Media
Ty Vukelich, Vice President, Corporate Marketing
(775) 327-2677
tvukelich@employers.com
or
Analysts
Vicki Erickson, Vice President, Investor Relations
(775) 327-2794
verickson@employers.com