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Insurance Policy Quote Something Does Not Seem Right

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My Insurance Policy Quote Seems Off 

My Insurance Policy quote does not seem right.  Workers Comp insurance quotes can cause a few sleepless nights.  We usually get emails and calls right after an employer receives their quote for the next years’ WC coverage.  This emailed question seemed to be different as the Workers Comp insurance quote seemed too low as compared to the previous year.

Graphic Of Mailbox Insurance Policy Quote With E-Mail Icon
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One would think the employer would be glad that their initial policy quote was too low.  Carriers do have a limited amount of leeway in their WC insurance policy quotes.   If an employer is not prepared budget-wise, a cash flow crisis can easily occur at the end of the policy year.  Follow along with me on how this may occur in your company.

  1. Your company receives a heavily discounted quote for Workers Comp coverage for the next year.
  2. You write the check for the quote thinking your company has landed a bargain.
  3. The Workers Comp premium audit occurs after policy expiry.
  4. The premium audit bill is much higher than anticipated – however, the total bill (policy + premium audit) was not that different from the previous year.
  5. Your company has 10 business days to pay off your audit bill.
  6. You are unable to pay the large premium audit bill.
  7. Your carrier decides to cancel you in the first few months of your next policy.   Non-payment of premium often requires a grace period of no or a very few days. 
  8. You have to look for WC coverage in desperation mode.
  9. One of the questions asked on your desperation mode policy application is have you been cancelled for non-payment of premium?  Well, that just happened.
  10. Carriers are very hesitant to underwrite your company as you do not pay your bills on time – see #9.
  11. Some states will not allow you to enter their risk pool if you have unpaid premiums.
  12. Your company faces massive fines for no WC coverage.

This happens more than one might think in the WC policy quote process.  How does an employer avoid this situation?

Business People Insurance Policy Quote Paying Attention In The Conference
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The methods to avoid the situation are:

  1. If it looks too good to be true, it probably is.
  2. Look at your old policies –  are there any major changes from the last three years such as a payroll reduction due to the economy, change of business practices, etc.?
  3. Budget for the premium audit if you think a large bill is coming after the policy expires.
  4. Make sure that you agree with the premium audit to the penny.
  5. You can dispute the premium audit and bill.  NEVER use disputes as a way to delay bill payment.  There has to be a good justification for the dispute.
  6. Look at alternative WC coverages that charge your company each pay period.

There are other methods to avoiding this situation.  The main one is #1.

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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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