Current Economy May Spawn Hard Insurance Market
The current economy may heavily affect the workers comp insurance markets. We have received this question very often from employers over the last three weeks. We have covered this recently. We thought it was best to cover it again.
The Workers Comp market is not as bad as it may seem right now. Even AIG was not failing in its insurance divisions. AIG was failing in the investments area. The market for insurance coverage is doing OK right now. I am not sure if I would even call it a hard market. When looking at the hard to soft market fluctuations of the past, the insurance market usually has about a six month lag behind the investment markets. The worst hardening of the insurance market is probably yet to come.
What I have noticed is the insurance carriers have lately been performing questionable Workers Comp audits and then bullying the employers that try to dispute any part of the audit. The hotspot for the heavy-handed audits is California. As we all know, California seems to be at the forefront for how the insurance markets operate for the most part.
We recently performed a re-audit for two different employers in California. The employers were a casino and a construction company. Even though the employers were correct to dispute the audits, the insurance carriers turned them over to their collection attorney without even considering the initial disputes.
That is when we became involved to straighten out the audit situations. The final results were a refund of $38,000 and the other one is still pending.
Could it be the case that the carriers are so overloaded with employers that are not paying their Workers Comp audit bills, that picking out the ones that have a legitimate dispute are lost in the masses? This is possible, but then again doubtful.
One of our mottoes is “Stop Just Writing Checks.(r)” If you are unsure of any communication from your insurance carrier, do not just assume that it is 100% true and correct. Asking Why is a very potent way to reduce your Workers Comp costs.
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