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According to the National Association of Independent Insurers (NAII), unless a claim is filed, workers’ compensation insurers would not know if an insured employee’s name is included in the infamous Specialty Designated National (SDN) list of criminals and terrorists targeted by the U.S. government. The NAII sent a letter to the Office of the Foreign Assets Control (OFAC) requesting clarification of this issue, which appeared as a question in the OFAC document, “Questions Frequently Asked By The Insurance Industry.” The question that prompted the NAII’s response asks: “A workers’ compensation policy is with the employer not the employee. Is it permissible for an insurer to maintain a workers’ compensation policy that would cover a person on the SDN list, since the insurer is not transacting business with the SDN, but only with his/her employer?” The OFAC answer: “No, it is not permissible because the insurer would be providing an indirect benefit.” However, although companies may have a list of their employees covered by the workers’ comp policy, the insurer may not see a list until a claim is filed, said NAII insurance services counsel Kathleen Jensen. She added that “once a claim is filed the insurer has the responsibility to check the SDN list and report within 10 days to OFAC if the claimant’s name appears on the list. In addition, the insurer must freeze and block payment of a claim, putting claim monies into an interest bearing account.” Jensen made it clear that the workers’ compensation insurers would not knowingly provide an indirect benefit since that company would not have any knowledge about whether a person is on the SDN list until a claim is filed. In its letter to OFAC, NAII offered to assist in re-wording the specific question and answer to reduce confusion and clarify the message for all interested parties.

Topics Carriers Workers' Compensation