Premium Audit Dispute – DIY
A Premium Audit Dispute can go awry if a company is not careful. Last week, I received an email with an audit dispute letter and an additional premium bill from a company in West Virginia. We usually receive one or two of these a month.
A manufacturer in WV decided to work with their agent and do a premium audit dispute. The result was a nightmare. In my opinion, the classification codes and jurisdictions should have been left as they were in the beginning.
This is a timeline of the results:
- The manufacturer thinks there is something wrong with their policies and wants to challenge their present policy and the last three years premium audits.
- The company wants their classification codes changed and wanted the workers in Kentucky only counted as WV employees
- They find a website with class codes for WV – totally different from premium rates
- They write a dispute letter outlining the changes.
- They do not check the statistics that go with each class code
- The insurance carrier accepts the class codes and jurisdiction
- The manufacturer’s E-Mod jumps sharply on all of the policies that were disputed from .89 to 1.23. That is a 38% increase.
- The Kentucky employees should have been left as is due to the rate for Workers Comp in WV was actually more expensive.
- The manufacturer receives a bill for an extra $113,000 in premiums.
- They can no longer bid on certain projects that require a 1.0 or less EMod (ouch).
The caveat is what looks cheaper might be much more expensive. The E-Mod/X-Mod calculation is very complicated when trying to adjust the variables. J&L goes through the laborious task of making sure the Mods are not going to increase enough to offset a refund when assisting an employer.
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