Issue: Insurers incorrectly calculate workers' compensation premiums for 30 to 40 percent of employers.
Benefit: You can help slash premium costs, and become a hero to your CEO, by knowing what mistakes to look for.
Action: Work with finance to initiate a premium audit to spot errors in employee misclassification and other issues.
When an Illinois construction company suspected it was overpaying its workers' comp premiums due to employee classification errors, the company stopped paying premiums and asked to renegotiate rates. The insurer resisted and sued for back premiums.
The result: An audit of the company's records discovered the company's overpayment to the tune of $5 million. The case was settled for $2 million in the employer's favor.
That company was one of the smart ones; most employers never question or detect mistakes made by their workers' comp insurers in calculating premiums and handling claims.
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