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Inadvertent Way To Increase Your Workers Comp Premiums


Workers Comp Big Premium Increases – Inadvertent Way To Cause

The inadvertent way that for an employer you can increase your Workers Compensation premium.

Picture of Dollars Inadvertent Way to increase your WC premiums

I have seen a situation happen very often in a recession that can cost an employer a large amount of workers comp premium dollars, especially at the yearly payroll audit. This is very prevalent in California now.

In a recession, most companies start to cross-train or lay off employees. This causes employees to do job tasks that they might not usually do in a normal economy. If your company is in this situation, please be very careful not to assign an employee to a job duty that would cause a great increase in premium.

For example, if an administrative or clerical worker is given a very small job to help clean tools, that employee’s workers comp classification code may change from a low-risk job (clerical) to a higher-risk job (mechanic).

Cupped Hands Presenting Inadvertent Way Financial Growth

Even if the employee only cleans tools for one-half hour per week, the insurance carrier auditor will move the employee from the lower class code to the higher one, which can increase the premiums you pay for that employee up to 5,000%. We have seen this recently in quite a few of the audits in the down economy.

As I heard at an NCCI conference, if the employee performs the high-risk job only for a few minutes a week, they should be classified in the higher class code without a doubt.

Bottom Line – make sure the workers compensation insurance carrier premium auditor knows exactly the job duties of all employees and back up your job classification with documented job duties. This may be time-consuming in the short term. In the long term, it will be well worth the documentation effort to avoid the inadvertent way to increase premiums.  

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James J Moore - Workers Comp Expert

Raleigh, NC, United States

About The Author...

James founded a Workers’ Compensation consulting firm, J&L Risk Management 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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