2 Common Workers’ Comp Mistakes

Thank you, Kevin Ring, for this guest post. Kevin is our guest instructor this week at Insurance Journal’s Academy of Insurance and is Lead Workers’ Compensation Analyst at the Institute for WorkComp Professionals.

Insurance agents have many opportunities to make mistakes when dealing with Workers’ Compensation. Here are two specific to the process of classifying and auditing a workers’ compensation policy.

Agents who blindly copy other agents’ work. Think of it as taking over as manager of a baseball team and doing nothing more than copying the old manager’s lineup. Maybe the guy playing third base should really be playing first base. This happens when an agent gets a new commercial account and does little more than copy the workers’ comp employee classifications the previous agent used. There are more than 600 classifications used by the National Council of Compensation Insurers (NCCI). Many of them cover similar but not identical operations. The rules about who is covered by these classifications are commonly misunderstood, as in a recent situation where employees of a steel retailer were misclassified because they also did some painting of the metal they sold. The painting classification was far more expensive and the classification should never have been used.

So right from the start, the agent is failing a client, through nothing more really than sheer laziness. Take time to walk the site to make sure you are familiar with the operation, what they do, and who does it. Then, read all the possible classifications to be sure you choose the correct one.

Agents who don’t get involved in the premium audit from the beginning. When agents don’t get involved in helping clients with their premium audits until after the fact, there can be a problem when the employer receives an unexpected bill.
But by then it’s like trying to put toothpaste back in the tube. It’s important that agents be more proactive and more involved in the process before the auditor shows up. By doing so, they can educate the employer prior to the audit on such items as what money they give employees that applies to workers’ compensation and what money doesn’t.
But you can’t leave it up to the employer to draw you into the process before it happens.

Our experience shows that 75% or more of audits are incorrect. Most of those mistakes are the result of insufficient recordkeeping and/or presenting incomplete records to the premium auditor. Fixing those mistakes after the fact is somewhere between very difficult and impossible.

Most agents and most employers believe that “Comp is comp is comp and you can’t do anything about it.” It’s not true!

Get involved in the classification and audit process and you can reduce your clients costs and write more business!

Topics Agencies Workers' Compensation