Closing Out A Workers Comp Year – May Not Work That Way
When closing out a Workers Comp year as an employer/agent, or adjuster, three things may make one think otherwise. Let us look at three things that make workers comp close out on a calendar year basis.
I came up with the idea for this article when I heard from an employer client that it was closing out its tax, insurance, and other part of the budget on December 31st.
Policies That Match Calendar Year
Many articles appear on this website concerning a policy that renews from 12/15 to 1/5 of each year. Agents and brokers are overloaded with January 1 renewals. Why? Think of Holiday shopping on December 22nd – December 24. The malls, stores, and online stores are under such a rush that you may find a less than desirable due to the timing.
Agents are overloaded with renewals during this time. Many business owners begin their business on January 1st. If you do, then moving your renewal date may be a great option to later in the month of January. Closing out a workers comp year on January 1 may cost your company in the long run.
Your Policy Year vs Your Experience Mod Year
As with the last section, many article reference the Experience Mod year. A quick note – the rating bureaus such as NCCI, WCIRB, and other Workers Comp rating agencies generate your Experience Mod.
Yes, it does not run equal to your policy year. Closing out a workers comp year on your Experience Mod comes six months later..
Yes, the claims that occurred during your policy year provide your insurance carrier a development period (6 months) for the claims staff to adjust your reserves up, down, close the file, or leave the reserves as they are on your claims loss run. Many articles on this website cover this well. See this search listing for some of the most important ones.
Premium Audit = Closing Out A Workers Comp Policy Year
The workers comp premium audit closes out your policy year. An employer cannot close out its policy year without a workers comp premium audit.
You are looking at a time span of up to 90 days for the premium audit – the final process in closing out a workers comp policy year depending on your insurance carrier’s timetable.
Most carriers are now performing hybrid premium audits where the employer provides the requested info through by scanning the documents and uploading them to the carrier. The 90 days may be shortened by this process.
