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List of Red Flags That You May be Overpaying Workers Comp Premiums

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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:

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    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?
  • Payrolls?

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………

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  • 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 that are Red Flags:

  • 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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James Moore

Raleigh, NC, United States

About The Author...

James founded a Workers’ Compensation consulting firm, J&L Risk Mgmt Consultants, Inc. in 1996. J&L’s mission is to reduce our clients’ Workers Compensation premiums by using time-tested techniques. J&L’s claims, premium, reserve and Experience Mod reviews have saved employers over $9.8 million in earned premiums over the last three years. J&L has saved numerous companies from bankruptcy proceedings as a result of insurance overpayments.

James has over 27 years of experience in insurance claims, audit, and underwriting, specializing in Workers’ Compensation. He has supervised, and managed the administration of Workers’ Compensation claims, and underwriting in over 45 states. His professional experience includes being the Director of Risk Management for the North Carolina School Boards Association. He created a very successful Workers’ Compensation Injury Rehabilitation Unit for school personnel.

James’s educational background, which centered on computer technology, culminated in earning a Masters of Business Administration (MBA); an Associate in Claims designation (AIC); and an Associate in Risk Management designation (ARM). He is a Chartered Financial Consultant (ChFC) and a licensed financial advisor. The NC Department of Insurance has certified him as an insurance instructor. He also possesses a Bachelors’ Degree in Actuarial Science.

LexisNexis has twice recognized his blog as one of the Top 25 Blogs on Workers’ Compensation. J&L has been listed in AM Best’s Preferred Providers Directory for Insurance Experts – Workers Compensation for over eight years. He recently won the prestigious Baucom Shine Lifetime Achievement Award for his volunteer contributions to the area of risk management and safety. James was recently named as an instructor for the prestigious Insurance Academy.

James is on the Board of Directors and Treasurer of the North Carolina Mid-State Safety Council. He has published two manuals on Workers’ Compensation and three different claims processing manuals. He has also written and has been quoted in numerous articles on reducing Workers’ Compensation costs for public and private employers. James publishes a weekly newsletter with 7,000 readers.

He currently possess press credentials and am invited to various national Workers Compensation conferences as a reporter.

James’s articles or interviews on Workers’ Compensation have appeared in the following publications or websites:

  • Risk and Insurance Management Society (RIMS)
  • Entrepreneur Magazine
  • Bloomberg Business News
  • WorkCompCentral.com
  • Claims Magazine
  • Risk & Insurance Magazine
  • Insurance Journal
  • Workers Compensation.com
  • LinkedIn, Twitter, Facebook and other social media sites
  • Various trade publications

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