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Subrogation – Mystery Workers Comp Premium Refund


Subrogation – The Silent Workers Comp Premium Refund

A Workers Comp premium refund that no one talks about is subrogation.  I have posted on subrogation in the past.  I would re-post the standard definition for subrogation, but it is one of the most confusing definitions in all of Worker’s Compensation.

Gold Coins Premium Refund Picture

My definition of subrogation is when there is another party besides the employer that was partially or fully responsible for the incident occurring to the employee.  Workers Comp adjusters sometimes overlook the possibility of recovering part of the claim payouts using subrogation.

Why would this occur?  A Worker’s Compensation adjuster is not a liability adjuster and may only be trained to handle Workers’ Compensation.  General or auto liability is a different segment of the insurance world and the Workers Comp adjuster may not be trained in the intricacies of liability other than Workers Compensation.

If the subrogation recoveries occur within six years after the accident, the money should be credited back against the file.  The correction should require a recalculation of the E-Mod and a refund of premiums.  Sometimes, the money will be recovered by the insurance carrier and credited against the file.  However, there are a few steps that are required to result in a premium refund.  This is a somewhat complicated set of steps that will likely recover some of the overpaid premiums on that specific file.

Vector Graphic Of Hand Premium Refund With Dollar Sign

What should your company do if there is a possibility of recovering some of the funds paid out on one or many Workers Comp files?  Your company should inform the adjuster when the claim is reported.  Some type of diary system should be instituted to track the subrogation claim.  One of the main things to look for at the start of the process is a letter from the adjuster to the third party putting them on notice.  Without this letter, your subrogation claim will be deemed worthless.

Subrogation takes a large amount of patience.  Your company’s efforts will pay off in the long run. If you feel that the subrogation claim is becoming too complicated or the carrier is not pursuing the third party enough to recover funds, it may be in your company’s best interests to bring in a consultant to help with the subrogation claim.

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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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