Page 7 - SIB Whitepaper - Workers' Comp Audit

“The hotel group ended up saving more than 25 percent – over $550,000, made up of nearly $300,000 in refunds and $250,000 in annual go-forward savings for next three years.”
their codes in the same way. In some NCCI states, someone who surveys roofs from the ground will be classi ed under a code identical to that of workers doing roo ng themselves – a much more dangerous task. There is room for maximizing your savings if you understand your state’s history of reading classi cation codes.
Depending on the size and complexity of your business and speci c regulations in your state, you may have dedicated sta that not only prepares for annual audits but is also responsible for questioning the results. Otherwise, companies may, and should, engage third party experts to handle this monumental e ort for them. Outside help may be especially useful in keeping abreast of changes in the practices of the insurance industry, which are common and can be used to your advantage. Formulas for EMR calculations, for instance, have undergone recurrent changes, including a dramatic change to the NCCI’s formulas recently.
CAN YOU WIN?
Once you start looking, you’ll nd your fair share of horror stories – or you may be one yourself
and nd that you’re not alone. But there are also plenty of success stories. You can and should be one of them.
For example, a hotel group with properties in several states – including the major markets of New York, Chicago and Washington, DC – was reeling from more than $2 million in annual workers’ comp premiums. The group enlisted a third-party expert to perform an audit of the insurance company’s annual review.
Restructuring the policy to be most advantageous for multiple locations, reviewing the EMR across its properties, combing through class codes, and analyzing payroll yielded enough disparity to question the ndings of the insurance underwriters.
The hotel group ended up saving more than 25 percent – over $550,000, made up of nearly $300,000 in refunds and $250,000 in annual go-forwardsavingsfornextthreeyears.
Results like these are not atypical, with annual savings often 25 percent or higher. Companies with more risk, like those in the construction or manufacturing industries, are more likely to nd savings with a deep-dive analysis of
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WORKERS’ COMPENSATION AUDIT • © 2017 SIB FIXED COST REDUCTION