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Premium Audit Disputes and Collection Agencies Confusion

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Premium Audit Disputes vs. Collection Agencies

Most premium audit disputes may not be documented by a collection agency.  I received a great question on Premium Audits this week. We are disputing our premium audit for 2009 – 2010. We are receiving letters from a collection agency and the carrier. Do we need to respond to all the letters (seven in total) from both companies while we are in a dispute?

Graphic Of White Envelope premium audit disputes in Black Background
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 My answer to this is an emphatic yes. I do not agree that you should have to answer to all seven letters. However, if you do not respond timely to either company, you would lose your ability to dispute the audit. I am not an expert in the creditor laws. I am not sure if the carriers in question can actually turn your file over to a collection agency during a valid premium dispute.

Most collection letters and carrier letters will give you a time frame in which to respond.. We received an email two weeks ago where a potential client had not responded to two collection letters from a collection agency. This can put an insured into a real conundrum as the carrier and collection agency will both considered your company to be in default on the dispute.

Pile Of Letters Premium Audit Disputes On Doormat
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My recommendation is to respond within the time frames given in the collection letters from both the carrier and collection agency. Any letters written during a dispute and especially collection letters should be sent Certified Mail with a Return Receipt. The return receipt is legal proof you have responded timely. If I am correct, the Certified Return Receipt fee for a one ounce letter is $5.59. That is $ well spent.

Phone calls are great, but they do not preserve your credit or premium audit dispute rights. Responding by letter keeps everything upfront and documented. I do not even recommend emails in this instance.

One recommendation that is very important is to read all pages and both sides of a collection letter from the carrier or collection agency. I have seen one where the letter looked innocuous only to find the 30 days to respond or default clause on the bottom of the very last page.

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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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