Page 5 - SIB Whitepaper - Workers' Comp Audit

“You have a right to question the insurance company’s classi cations and policy structure, and, at the very least, to rigorously search for abnormalities and calculation errors.”
3. Experience Modi cation Rate – The EMR is a gauge of the cost of a company’s workplace injuries over the past three years andisusedtoestimatethefuturechanceof risk. Again, despite discrepancies in various states’ calculation of this number and a awed oversight process in the reporting of numbers that determine it, EMR has increasingly become a standard measure for pricing workers’ comp coverage. An EMR of 1 is considered average and will result in no modi cation to your premium; claims drive this number up. Because three years of incidents go into the calculation of your EMR, a claim will increase your premium for several years after it is led. Thus, because the EMR acts as a multiplier for premiums, an increase can drastically impact what you pay – and a decrease based on vigilant oversight of your audit will produce concomitantly large savings.
4. Contractors – did outside contractors engaged during the prior year have their own workers’ comp policies in place? If they didn’t – or if you don’t know – you may end up paying for them retroactively on yours.
5. Other sources – Insurers will use all of the tools available to them to reinterpret your workplace. This includes company websites and outside references to a company’s operations. Any discrepancies between such materials and the documents used to generate your estimated premium (the initial cost) may be exploited to the insurer’s advantage. You must be prepared to explain or defend any potential discrepancies.
Once the insurance company completes its annual review, it will present its ndings in the form of adjusted premiums for the upcoming year and a bill for additional premiums based on the prior policy year. Consider: has your bill ever gone down without a reduction to your headcount?
AUDIT THE AUDITOR
You have a right to question the insurance company’sclassi cationsandpolicystructure, and, at the very least, to rigorously search for abnormalities and calculation errors. Every year your insurance company audits you – turn the tables and audit them in turn. In fact,
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WORKERS’ COMPENSATION AUDIT • © 2017 SIB FIXED COST REDUCTION