DEFINITION of 'Workers' Compensation Catastrophe Cover'
A type of loss reinsurance that is purchased by insurers of workers' compensation to protect against losses that result from a single catastrophic event or a series of events involving multiple workers. Workers' compensation catastrophe coverage is used to limit costs when a catastrophic event results in multiple claims. Workers' compensation is a type of insurance that provides medical benefits and wage replacement for employees who are injured while on the job. Benefits may be available to the spouse and dependents of employees who are killed while at work.
BREAKING DOWN 'Workers' Compensation Catastrophe Cover'
Workers' compensation catastrophe cover is reinsurance that responds to disaster or multi-claimant loss. The insurance industry was forced to evaluate and make improvements to this type of coverage following the catastrophic events of September 11, 2001. Rates for this type of reinsurance have become multiples of pre-September 11 levels.