Roberts Insurance Group Blog
Auditing Your Company's Workers Comp Program | How To Ensure The Premium Is Accurate | Workers Comp Series #4
There are so many instances of businesses overpaying for their workers compensation simply due inaccurate data between the parties involved. When it comes to workers compensation in Georgia, the parties involved in the premium determination are: the business (you), the insurance company, and the National Council on Compensation Insurance (NCCI).
Most of the time there is a breakdown in sharing of incorrect data it amounts to the business paying more in workers compensation insurance premiums than they otherwise should. The data is usually related to claims data and occupation data.
Claims Data- How It Impacts Your Workers Comp Premiums
The most common way that businesses end up paying more than they should for their workers comp is due to claims data being inaccurately reported. When workers comp claims arise, that data gets reported to NCCI. NCCI then uses the claims data to determine the experience modification factor (E-Mod) for the business. Once the E-Mod is generated, the insurance company applies the E-Mod to the premium for the business, which results in an increase in premium.
What often happens is a claim will be opened and the insurance company will report what they expect to pay for that claim to NCCI, even if it hasn't closed out. If the claim closes out for less than what was anticipated by the insurance company, it often times does not get reported, which makes the E-Mod higher than it should be and leaves the business paying more in premium than they should.
Something we recommend businesses to take advantage of is having their commercial insurance agent audit their experience mod. As a commercial insurance agent, we use software to audit E-Mods to ensure accuracy. It will also show the business the financial impact on each and every claim and allow them to walk through several "what-if" scenarios. It is worth noting that about 65% of the E-Mods being used are inaccurate, meaning there's a 65%+ chance your business is overpaying for workers compensation.
Occupation Data And Class Codes- How It Impacts Your Workers Comp Premiums
The second issue we frequently see that causes business to pay more than they should for their existing workers comp program is the use of incorrect class codes. Class codes are used to break down the different occupations within your organization based on how hazardous they are. This can somewhat depend on the industry you are in, but in many cases Georgia businesses can take advantage of using itemized class codes for their payroll.
For example, an auto repair and sales shop may have $500,000 in total payroll. $250,000 for technicians, $150,000 for sales persons, and $100,000 for clerical employees. The most hazardous and highest premium employees are going to be the technicians because they are much more likely to get injured while on the job. Instead of paying premium on $500,000 of payroll for auto repair, this business can pay $250,000 for auto repair technician payroll and then can use less hazardous class codes for the sales people and clerical workers, which would save them 35-40% on their workers comp premiums.
So What Can Your Business Do To Find Out If You Are Overpaying?
The simple answer is to reach out to us and schedule a free consultation. If there is money being left on the table, we can work with you to get that adjusted and help your business recover overpayment from the past couple of years. Our CompCostControl Program is designed to audit your company's workers compensation program to ensure you're not overpaying. Click below if you'd like to schedule a consultation to see what we can do for your company!