Consent to Consented Premiums
Consented premium allows the insurance carrier to deviate from their state filings for a certain Workers Comp Class Code. This is a popular way to write policies in the state of Florida. A carrier-supplied factor is added to the filed rates. The “consent” is given by the signature of the insured.
This usually happens when a company is very hard to classify or the classification code that is most similar to the company does not account for all of the risks inherent to the specific employer. These premiums must be pre-approved by the Department of Insurance where coverage is sought.
We reviewed a recent policy where the agreed premium was 280% more than the filed classification code. The insured employer had signed off on the consented (agreed) premium.
The advantages to agreed premiums are:
- Allows a hard-to-cover employer to have Workers Comp insurance coverage
- Must be approved by the Department of Insurance
The disadvantages are:
- A much higher Workers Comp premium cost.
- If any questions come up later about the policy or audit, it is very difficult to dispute as the premiums and classification codes were consented to by the employer.
- There may have been a classification code that more closely fits the employer which could have avoided a heavy surcharge.
- The E-Mods are being calculated from a less-risky classification, even though there is a higher-risk element added to the policy.
Update – I received a notice from my home insurer that I needed to sign a consented premium form as what they are going to charge me was above the recommended amount by the North Carolina Insurance Commissioner. If I did not sign it, I was going to be canceled in 30 days.
Next Up – The West Virginia Workers Comp Forum of 4/08/08
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