Red Flags – Could You Be Paying Too Much For Workers Comp?
Red Flags for Overpaying your Workers Comp premiums are listed below. Most of these show up in almost all of our Workers Comp premium audits.
You will need to think back over the last five years on your Workers Comp insurance for all of the following:
Has your company experienced significant increases in Workers’ Compensation premiums?
- Has your company incurred charges for uninsured subcontractors or owner-operators?
- Has your insurance company included in your payroll any owner-operator expenses?
- Do your Classification Codes include “all employees” or “not otherwise classified” (NOC)?
- Has your company changed ownership or business operations?
- Has your company experienced a merger or expansion into other states?
- Has your company left a relationship with an Employee Leasing Company or a PEO?
Has your insurance company, NCCI, or State Rating Bureau changed, omitted, or added..
- Classification Rates?
- Classifications Codes?
- Experience Modification Factor?
Were your Insurance Company’s Workers’ Compensation Audits ……
- More than 120 days after the Policy Expiration Date?
- Conducted via telephone?
- Conducted using 941’s or state unemployment forms?
Did the Workers’ Compensation Auditor………
- Not leave a copy of his or her Premium Audit Workpapers?
- Ask very few questions?
- Examine very few records?
- Is your payroll audit always brief and superficial?
Some other areas to think about:
- Has the NCCI or your states’ rating bureau responded to a question or complaint unfavorably?
- Has your policy’s modifier been labeled as either “contingent” or “preliminary”?
- Has an endorsement increased the modifier after the policy began?
- Has your policy been frequently endorsed with changes to classification, rates, or payrolls?
- Are your employees paid a significant amount of overtime?
There are may other Red Flags. The above ones are the most common that we see when an employer is overpaying their Workers Comp premiums. Think back over the last five years. If some of these have happened to your company, you likely are overpaying for your Work Comp coverage.
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