Workers' compensation rates have been on the rise across the country.
Wouldn't you like to know if you are being overcharged?
Insurance companies are notorious for giving people the runaround when it comes to analyzing their workers compensation premium amounts or the calculation of their experience modification rating. It's in the insurance company's best interest to keep you ignorant about your policy. If you knew about these mistakes you would be demanding a refund on your overpaid workers' compensation premium.Wouldn't you like to know if you are being overcharged?
Things They Don't Want You to Know:
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| Workers Compensation Rates - What Insurance Companies Don't Want You to Know! |
Lack of One Entity Overseeing the Process: The insurance company will only do as much as they have to according to the state insurance laws. They do not calculate the experience modification factor or develop classification codes. This is done by rating bureaus like the National Council on Compensation Insurance (NCCI) or in California the Workers Compensation Insurance Rating Bureau (WCIRB). The insurance agency or broker is paid by the insurance companies and are subject to contracts with them. Because everybody works independently of each other, too many hands touching your data can lead to mistakes that cause you to be overcharged!
Your Experience Rating Compares Your Company's Past Premiums with Past Losses: In reality, the formula compares the actual incurred losses for your company with average loss data for all companies in the state who utilize the same classification codes and similar amounts of payroll.
Large Insurance Companies Don't Make Mistakes: The entire system is based upon a method of reporting data that almost guarantees mistakes. First, is simply the "human element" - people making mistakes, which leads to the "garbage in - garbage out/overpaid premium" problem. Second, there is the timing issue, with reporting the data to the bureau that calculates the experience modification. Lastly, as we have discussed above, no one is performing a quality control check on themselves or on each other.
There Are Errors in The Calculation of Your Audit Premium: Unfortunately, many insurance company premium auditors are under tremendous pressure to audit as many policies as possible. On top of that, they are poorly trained in workers compensation laws and auditing procedures. As a result, payrolls are often reported incorrectly. They either are overstated, not limited by legitimate audit rules, or misclassified. Either way, it is costing your company money.
Insurance Companies Would Never Recommend an Independent Audit: The workers' compensation insurance industry is burdened with errors from wrong classification codes to simple incorrect calculations, costing your business money. Because of the complexity of the workers compensation system and the various entities involved, there is no universal method to correct these errors. An independent audit would reveal these errors, entitling your company a refund, which would make the insurance companies look bad.
Your Experience Rating Compares Your Company's Past Premiums with Past Losses: In reality, the formula compares the actual incurred losses for your company with average loss data for all companies in the state who utilize the same classification codes and similar amounts of payroll.
Large Insurance Companies Don't Make Mistakes: The entire system is based upon a method of reporting data that almost guarantees mistakes. First, is simply the "human element" - people making mistakes, which leads to the "garbage in - garbage out/overpaid premium" problem. Second, there is the timing issue, with reporting the data to the bureau that calculates the experience modification. Lastly, as we have discussed above, no one is performing a quality control check on themselves or on each other.
There Are Errors in The Calculation of Your Audit Premium: Unfortunately, many insurance company premium auditors are under tremendous pressure to audit as many policies as possible. On top of that, they are poorly trained in workers compensation laws and auditing procedures. As a result, payrolls are often reported incorrectly. They either are overstated, not limited by legitimate audit rules, or misclassified. Either way, it is costing your company money.
Insurance Companies Would Never Recommend an Independent Audit: The workers' compensation insurance industry is burdened with errors from wrong classification codes to simple incorrect calculations, costing your business money. Because of the complexity of the workers compensation system and the various entities involved, there is no universal method to correct these errors. An independent audit would reveal these errors, entitling your company a refund, which would make the insurance companies look bad.
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