Financial Advice Blog

If you have ever had employees then you have had to dealwith workers comp insurance companies.  Having to deal with the constant threat of increased premiums will make any business owner paranoid.

No doubt you already realize that there are things that happen in your company that can cause the workers comp insurance companies to increase your rates.  Other reasons you probably don’t realize are that there are also numerous errors made by the carrier that have a detrimental effect on your business.  Following is a list of common mistakes by employers and workers comp insurance companies.

The following are some frequent errors made by companies that cause work compensation rates to increase:

• Lack of safety program for injury prevention
• A lack of an effective return to work procedure
• Not informing insurance companies of injuries immediately
• No direct contact with the injured worker’s doctor

The preceding are just a few of the frequent mistakes that employers make when dealing with work comp.  There are a list of things applicable that will help business owners to lower costs with minimal upfront costs.  If left unchecked the reasons above can amount to thousands of dollars in higher premiums.

The following list are common errors made by workers comp insurance companies:

• Employees assigned the wrong job classification code
• Business’ experience modification was calculated using the wrong information
• Proper discounts and exemptions never applied
• Payroll calculation errors

Believe it or not, these problems are just a small sample of the several errors that arise.  A common problem is when the workers comp insurance company is calculating the overtime rate at the amount indicated on the payroll as opposed to a straight hourly rate.

A common problem is workers being put into the wrong job class category.  This mistake can cost business owners thousands of dollars.  An example is a clerical employee being mis-classified under the roofing classification code because he/she has to go to the work site on an occasional basis.

If you have ever dealt with insurers you know how hard it can be to get your business’ rates decreased.  In all likeliness you may be correct, you may not have the knowledge you need to show them the mistake so that the problem can be fixed.  Then there’s the errors that you don’t know of that are costing your business thousands of dollars.  Mistakes that amount to 10s of thousands of dollars each year.

Trust me, I have witnessed it first hand.  I just recently reviewed a policy that had so many mistakes that the employer was refunded $96K.  Basically, the company were refunded back $16K a year foreach of the six years past.  I don’t know about you but I could use an extra $96K.

You may think I am making this up but that’s not the case.  That’s not even the largest refund I’ve seen.  Typically on average we see about $37K in refunds.  Obviously it all depends on how much your business is paying in premiums but typically we typically recover about 10% of the annual premium.

You don’t need to take my word on it.  Try it and see, I doubt you will be disappointed.

To read more go to: Work Comp Insurance Companies

Filed under: Financial Advice