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Workers Comp Policy Bill Finalized With Premium Audit

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Final Workers Comp Policy Bill Comes From The Premium Audit

The final Workers Comp Policy bill  results directly from premium audit.  I received a question late last night on the last article I wrote on Deposit Premium.   The question – (paraphrased) was:

Picture of Man Calculating Workers Comp Policy Bill Concept
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We paid a very large deposit premium upfront January 2012.  We have not heard from the insurance carrier except to renew our current policy for 2013.  Should we be expecting a call or letter from our carrier’s premium auditor?  Was the deposit premium for 2012 adequate?   Should we be doing something on our end? 

If your company has paid all premiums requested by your carrier, then you have not really done anything that would violate your 2012 or 2013 policy.  April is a little late for a policy that expired in December 2012.  Your final policy premium should never be considered as the deposit premium with your new policy.

Most states do have some type of rules on when policies can be audited by the carrier.   If you look in your policy, in usually the last few pages, you will find your carrier’s premium audit rules.  Most of the time it will have a passage or two on your responsibilities for your final premium audit.

You may want to check your incoming letters.  We have seen a very large carrier in the mid-Atlantic states send out a large amount of marketing materials – sometimes two or three times a month.   A letter with a follow up letter was sent out by the carrier from the audit department.  The client employer actually thought it was marketing material and threw them out each time.

Their first notice was a 10 day notice to cancel their current policy for not abiding by the premium audit rules for the prior policy.  With our assistance, the situation was straightened out in the nick of time and coverage cancellation was avoided.

Graphic Of Educational Set Workers Comp Policy Bill Icon
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A good suggestion is to have someone responsible for any (not just Workers Comp) insurance mail.   Do not assume that your agent is receiving carbon copies of all of the mail from your carrier.  The designated person should bring any of these items to the attention of management:

  • Endorsements
  • Changes to premiums
  • Bills
  • Policies
  • Notices
  • Audit results
  • Audit bills

If you feel your company may be owed a refund, then you may want to reach out to the carrier.  As post-audit policy refunds are becoming more rare, that is a decision you may want to weigh heavily.  All Workers Comp policies require responses, not initial contact.

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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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