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North Carolina Workers Comp Uninsureds – I Made Terrible Mistake

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Too Conservative On North Carolina Workers Comp Uninsureds

The articles which were written on North Carolina Workers Comp uninsureds were to me an overestimation.  I had written various articles on my shock and dismay that over 30,000 companies in North Carolina had no workers compensation coverage.  

Picture of Broken Red Heart bandaid of Uninsured text north carolina workers comp uninsureds
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Some of the articles are listed below:

A recent very astute television reporter for News 9 in Charlotte performed a great job at digging into the real numbers to see the true number of North Carolina Workers Comp uninsureds.   I will cover the NC Auditors report next week as I want to analyze it fully. 

Beyond surprisingly or astounding – the reporter discovered that 52,000 – yes over 52,000 businesses in North Carolina that should have coverage had none.   The reporter referenced the State Auditor’s report for this figure.  

I have just sent an email to him to make sure that this count involved businesses with more than three employees.  As you may know, coverage is not required in North Carolina if a company has three or less employees.

What do 52,000 uncovered employers cause in the general marketplace in North Carolina?  

Businessman North Carolina Workers Comp Uninsureds Using Umbrella With Money
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  • The first area would be that the insurance marketplace would be very skewed as far as insurance ratings or E-Mods.  This may cause employer with WC insurance to pay more premiums 
  • Insurance agents may be shorted very heavily due to lack of premium that should be paid by these employers.
  • Ghost policies that will produce a certificate of insurance but not cover the employees would be prevalent in the marketplace
  • The health insurance marketplace or even North Carolina Medicaid may be absorbing the cost of treating these injuries
  • The cost of paying for injured workers’ disability (Temporary Total, Permanent Partial, etc.) may be shifted to Unemployment or even welfare.  
  • Treatment facilities may be receiving less than they should to treat an injury or may possibly not be paid at all if they later find out there is no coverage. 
  • These uncovered employers would not strive for a safe workplace as there would be no retribution for having an unsafe workplace of their employees – very important
Couple North Carolina Workers Comp Uninsureds With Accounting At Home
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There are many other concerns and considerations with 52,000 employers not being on the Workers Compensation rolls.  

One area that has not been explored is if the employer does not have coverage, then would the injured employee file a liability suit against the employer?   This could get interesting – but then again, if they have no workers comp coverage, then there is likely no liability coverages either. 

Other states have handled these types of situations such as West Virginia posting signs at workplaces that a certain employer (usually construction) is operating without WC coverage.   I actually saw those signs when I was there consulting for clients.   They were very noticeable as I had driven by a major construction site. 

The new North Carolina Insurance Commissioner Mike Causey may have to act on what I would call a crisis point.  One can understand if there are a few thousand, however, 52,000???

We have been in the business of aiding employers cut their work comp costs, however, we have never advocated with going bare as bankruptcy may be the alternative is there is a very large claim against any of the North Carolina Workers Comp uninsureds. 

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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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