Consistently saving money by managing the insurance process
Premium Audits don’t sound exciting; but consistently saving by managing the process — $30,000 here, 50,000 there – is exciting.
A workers compensation audit is a mysterious process: the auditor comes in, settles down in a conference room with a lap top, and you offer her W2’s and coffee. She leaves with piles of data, and a few weeks later you get a bill (maybe a credit occasionally). You probably don’t have time to figure out if all the numbers are correct, or what they should be.
Two examples show how managing the process saves money:
A client’s payroll for the year was higher than projected, and we suggested that the client budget about $5,000 additional for the audit. The bill came in for $38,000. The client had been tipped off by us and knew that was wrong. We got to work.
We reviewed the auditor’s notes, and the client’s books, and found the mistake. It was time consuming work. By digging back into source documents we were able to find $2,000,000 in payroll which should have been counted as $52,000. We were able to prepare a case to present to the insurance company, and they corrected the audit. Our efforts resulted in a $30,000 reduction in the audit premium.
The problem was obvious; but we had the tools to fix it. Our ongoing relationship with this client had set the stage for managing the audit.
A second client had a complicated audit. Much of their work is done by independent contractor drivers. The workers compensation manual states that such drivers need only count in the premium at 1/3 of the compensation paid to them.
The auditor disagreed. We sent her the excerpt from the manual illustrating this rule. She continued to disagree, stating that the rule provided “did not apply in this case”, and presented weak reasons why.
We had to appeal within the insurance company, but did succeed in finding the person who would respect the manual – the audit resulted in $22,000 less premium than if this rule had not been applied.
Managing your insurance is much like managing anything else. Knowing what to expect, working to get to that expectation, monitoring to see if the expectation is met, and responding quickly and effectively when it is not. This function requires expertise and attention; LicataRisk can offer both.
Shining a bright light on insurance policy terms and conditions you never knew were in your policy, and would only find out about after a claim, and various other insurance traps. Insurance coverage certainty needs to be nailed down BEFORE a loss!
Apr 21, 2014