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Premium Audit Nightmare For January Policies

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Premium Audit Nightmare – Change Policy Renewal Date 

A premium audit nightmare that can happen with January polices can easily be avoided with some planning.

Graphic Of Dollar Tight With Tape Measure Premium Audit Nightmare Policy Budget
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Almost 50% of the Workers Comp policies renew at the first of the year. One thing we see very often is our client or potential will call and say that they have found a great low-priced policy they have found and will be switching to the new insurance carrier.

We then will usually receive a frantic call or email after the policy expiration. The insurance carrier payroll (premium) audit bill is huge and the company did not have the money budgeted to cover the bill.

One of the easiest ways to avoid this type of disaster is to compare your Workers Compensation policies and audits from the past. If your prior premium audit and polices indicate that your company has for example $2.5 million in payroll, then why would the new policy have a payroll of $300,000? This is from a real-world example.

Tipped Coin Jar Premium Audit Nightmare Image
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The main occurrence that may lower your premium from the former year would of course happen due to a period of major layoffs.

I am not saying that any company has to pay every penny owed on the policy upfront. However, if you have a previous payroll of $2.5 million, you are going to have to “pony up” a large amount of $ at audit. Your company should have a budget for Workers Comp premiums for the upcoming bill after the premium audit.

This type of budgeting advice will also apply to any policy. I wanted to pass this info along due to the large % of polices that renew on January 1st. I wrote a previous article on payroll audit budgeting here.

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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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