When a worker is injured on the job, workers’ compensation insurance provides benefits and coverage to ensure that worker is compensated for lost wages and medical expenses. To guarantee this coverage is provided, employers pay workers’ compensation insurance premiums. What happens when the insurance provider can no longer support the number of claims that are made against the company? Who pays for benefits if the insurance company goes under?

These are questions which are not only important but also timely in the wake of recent story reported by the BestWire, and insurance industry publication. Atlantic Mutual Insurance, the same company that paid out claims after the Titanic sank is unable to survive a recent wave of workers’ compensation claims. According to the New York Liquidation Bureau, “The company was placed into liquidation and New York’s superintendent of insurance was appointed liquidator on April 27th”.

This brings to the forefront a very important issue within the workers’ compensation system. If employers are paying insurance premiums, how can they ensure their workers’ will have the coverage they need at the time they need it? Another issue which is highlighted by this historical liquidation of a long standing insurance company is the long term affect of fraudulent workers’ compensation claims. Once again the issue of fraud rears its’ ugly head and proves that everyone suffers the consequences of a few when fraud is committed.

In most cases arrangements will be made in advance to guarantee insurance policies are covered, however that leaves the remaining issue of fraud on the front burner. Excessive claims that are not legitimate in nature rob from those who are entitled to benefits and pass the burden onto taxpayers in the form of other programs which pick up when workers’ compensation cannot provide necessary benefits.