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Premium Recovery For Fully Paid Policy Resolved By Premium Audit


Fully Paid Policy – Premium Recovery May Not Be Fruitful

Workers Compensation premium recovery can be very complicated on a prepaid policy. Over the weekend, I received this question –

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Our company canceled our policy in February. We had six months left before the policy ended. We have not heard from our prior carrier on refunding any of the prepaid premium. We were not on any type of payment plan. How do we go about recovering our premiums from the carrier?

My answer that I emailed back was –

  • Short-Rate Penalty – As you canceled mid-term, did your company experience a short rate penalty? Short rate penalties can be substantial.  The penalty may have been more than your leftover policy premiums.
  • Final Premium Audit – as you mentioned you did not hear from the carrier, you should have a premium audit pending to close out the short policy year.
  • Call the customer service phone number listed on your policy.  If you call, fully document who you had spoken to and the conversation

    Picture Premium Recovery Nursing Pushing Patient
  • You may get more than you asked for overall. If you have a final premium audit pending with a short rate penalty – your company may owe more than the premium recovery you are anticipating. The premium penalty can be 50% or more in certain cases. All of the rating bureaus have the formula on file. Please be extremely careful on the numbers that are input into the formula.
  • Calculate the short rate penalty on your own – these calculations can be cumbersome and complicated. Your company may want to calculate this number before you contact the carrier.
  • Be patient, your carrier will get around to the audit.
  • As always, if you feel that you are in over your head or that you may end up costing your company more $ by pursuing the premium recovery, you may want to call on a non-agent expert for an unbiased opinion.

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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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