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Category Archives: Audit
Uncovering Loss Cost Multipliers
I’d written previously about knowing your carriers LCM and why that’s important to you. If you don’t know what it is, start HERE.
If you’re ready for step two, I’m sharing links to the various states LCM’s. These aren’t always easy to find and some states deliberately don’t publish them. In some instances, the link will go directly to a list, others will involve another step or two to complete the search.
Audits and your Liability Policy
A common topic of discussion is the workers’ comp audit. Either through the horror stories of friends or self experience, you’ve heard the terrible tale of the large comp audit. You’re now keenly tuned in to the payrolls and exposures on your work comp policy vowing never to let this happen to your organization again (or ever)!
Perhaps you’ve even transitioned to a “pay as you go” program to virtually eliminate the chance of an audit bill.
But… and there always seems to be a but. What about your liability policy? While you find yourself plugging the holes in one area, don’t forget the GL policy is often an auditable policy like the WC. Don’t make the mistake of assuming that since you’ve notified your carrier or broker of accurate payrolls for the workers’ compensation policy, those same updates translated to your liability policy! You might be surprised to learn otherwise and we already know, that’s rarely a good thing.
Keep track of your liability policy exposures just as you do on the WC!
Hey, that’s a BONUS not regular Pay!
I often get the question on what’s not chargeable by an auditor, but what about a simple list of what they can charge for?
Here is a list of what IS chargeable under a workers’ comp audit. There are variations but this is a good starting point of what is included in an insurance audit!
Big Changes with non-compliant Audits!
Ever thought of not complying with your work comp insurance audit? In years past failure to comply with an audit might have caused an estimated audit with exposures inflated by 50% and some carriers were forgiving enough to process non compliant audits with no additional payroll increases. With the new changes you may want to reconsider unless you’re ready for a potential 200% increase in exposures!
Does your policy have the endorsement WC 00 04 24?
2016-14: Audit Noncompliance Charge for WC Policies
NCCI has established an Audit Noncompliance Charge Endorsement (WC 00 04 24) that will be included on all new and renewal workers’ compensation policies effective January 1, 2017. The endorsement enables an insurance carrier to apply an Audit Noncompliance Charge to a workers’ compensation policy if the policyholder does not comply with the annual premium audit of their records. When attached to policies, the endorsement will include the estimated annual payroll (in the Basis of Audit Noncompliance Charge section) and the annual premium multiplier that may be applied for noncompliance (in the Maximum Audit Noncompliance Charge Multiplier section).
Injury Types- What is Permanent Partial?
When reviewing your loss runs or mod worksheet you’ll run into the codes or following descriptions. A quick overview of the common injury types are outlined below.
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Fatal—Death claims
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Permanent Total—Claimant expected to never be able to return work
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Permanent Partial—Claimant expected to return to work but with some permanent impairment or disfigurement
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Temporary Total—Claimant expected to recover fully
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Medical Only—No benefits for lost wages are expected to be paid
Need help with your ERM/Experience Rating/MOD?
We continue to offer assistance in any area providing experience rating analysis and experience mod management services.
All consultations are confidential. If you or your agent don’t have the resources available, don’t hesitate to give us a call.
We can provide:
- Premium costs of various losses
Minimum MOD
Breakdown of potential premium savings for medical only claims (ERA states)
Future MOD projections - Suggestions to improve the rating, and MOD verification
- Mod Comparison available for repeat customer Experience MOD reviews
Call or email for options, pricing, and availability. In some cases, there may be no cost to you for this service.
What payrolls or compensation are NOT chargeable at audit?
Our previous post, What Payrolls Do I Need to Have for an Audit , goes through all types of compensation that an auditor will include at the audit, but what about those payrolls that are not chargeable on an audit?
The complete list of “Excluded Remuneration” can be found here.
Continue reading What payrolls or compensation are NOT chargeable at audit?
Can I exclude myself from wc coverage?
Deciding who is included or excluded from workers’ compensation coverage varies state by state. Before deciding whether or not to include or exclude yourself, you need to consider a few important factors aside from just the premium savings.
- Does my health policy exclude coverage for work related injuries?
- What is my risk of injury and the associated premiums for coverage?
- Is there a minimum and maximum payroll allocation for officers and workers compensation coverage? What are those figures?
- Does an injury I voluntarily excluded coverage for jeapardize medicare or medicade benefits in the future?
In Maryland,
Workers compensation is compulsory for corporate officers, who are considered employees of the corporate entity. However, officers of a Maryland Close Corporation, a Professional Corporation, a Farm Corporation or a member of a Limited Liability Company with at least 20% ownership in profits may elect coverage exclusion. Partners and Sole Proprietors are exempt from workers compensation coverage but both Partners and Sole Proprietors may elect coverage.
Working in New York and your “All States Coverage”
Say it isn’t so!!! Your All States Endorsement may not meet the state requirements! Failure to meet the requirements of any state can have serious consequences. In New York State for example, failure to meet their requirements can quickly lead to a $20,000 fine! This figure isn’t just a scare tactic. Iv’e seen it time and time again. Companies often take jobs in the state and fail to notify their agent until they receive the substantial fine, which isn’t easily disputed if you were working in the state!
Let this be a reminder to check or have your agent check the state laws BEFORE going into another jurisdiction! It could save you a lot of time, money, and heartache!
Working in New York – AS OF MAY 14, 2013
Please check the state website for the most up to date information!!! INFORMATION IS SUBJECT TO CHANGE AT ANY TIME!
http://www.wcb.ny.gov/content/main/onthejob/CoverageSituations/outOfStateEmployers.jsp
Out-of-state Employers with Employees WORKING in New York State
As part of the 2007 Workers’ Compensation Reform Legislation, Workers’ Compensation Law Section 50(2) was amended to state that when compensation is secured via a stock corporation, mutual corporation or reciprocal insurer authorized to transact the business of workers’ compensation insurance in this state, that such coverage be obtained “through a policy issued under the law of this state.”
On July 12, 2007, Subject Number 046-198 was issued stating that “effective September 9, 2007, all out-of-state employers with employees working in New York State will be required to carry a full statutory New York State workers’ compensation insurance policy.” A full, statutory NYS workers’ compensation insurance policy is one where New York is listed in item 3A on the Information Page of an employer’s workers’ compensation insurance policy.
Thereafter, in September 2007, the Board posted on its website notice that the Board was reviewing the applicability of this provision to out-of-state employers whose employees are attending meetings, seminars, or other minimal activities in New York State. The Board has concluded its review of this matter and now issues the following Out-of-State Employers policy. Insurance carriers, agents, and brokers, as well as out-of-state employers, should carefully review this policy.
Full NY Workers’ Compensation Coverage Required
An out-of-state employer with an individual or individuals working in New York State is required to have a full NYS workers’ compensation insurance policy if that employer (as defined in the WCL) meets ANY of the following criteria:
- The employer (as defined in the WCL) is required to register with the NYS Department of Labor and pay Unemployment Insurance for any period in question.
- The employer has a permanent physical location in New York or has employees whose primary work location is here.
- The employer is operating in New York under a permit, contract, or license granted by the State of New York, its counties or any municipality as defined under §57 of the Workers’ Compensation Law.
- The employer is working as a contractor/general contractor/subcontractor on a construction project in New York.
- In the previous year, the employer had employees physically in New York for:
at least 40 hours of every week for a period of longer than 2 consecutive weeks; or
had employees present in New York for 25 or more individual days (e.g.- 5 employees working for 5 days in New York equals 25 individual employee days).
Employees traveling through the State not stopping for deliveries, pick-ups, or other work are not deemed to have worked a day here. An employer that has reason to know that it will meet these criteria in the current year, even if it has not done so in the prior year, must obtain the required coverage.
If an out-of-state employer with an individual or individuals working in New York State meets any of the above requirements, NY MUST be listed on Item 3A on the Information Page of an employer’s workers’ compensation insurance policy. This means that the employer is fully covered under the NY Workers’ Compensation Law.
Full NY Workers’ Compensation Coverage NOT Required, 3C Coverage Acceptable
When out-of-state employers send employees into New York for work purposes and a full, statutory NYS workers’ compensation insurance policy is not required, the employer must have such coverage for workers’ compensation as required under the laws of its state, and New York must be listed in item 3C on the Information Page of the employer’s workers’ compensation insurance policy. If the insurance carrier writing the out-of-state employer’s workers’ compensation insurance policy is not authorized by the NYS Insurance Department to write workers’ compensation and employers’ liability coverage in New York, for the 3C coverage to comply with this policy, the insurance carrier must have completed, signed, and filed the Statement of Compliance With Workers’ Compensation Law with the Chair, Form C-105.11.
An out-of-state employer having a new worker’s compensation insurance policy issued after February 1, 2011 by a private insurance carrier not licensed in New York and listing New York under 3C of that policy will not qualify for the specific exemptions set forth in the Out-of-State Employers Policy statement unless the carrier completes, signs, and files the Statement of Compliance With Workers’ Compensation Law with the Chair, Form C-105.11.
The Board will post on its website a list of all carriers that have filed the Statement of Compliance with Workers’ Compensation Law, and will provide periodic updates to such listing.
It may be appropriate to contact your insurance broker, carrier or agent, check with your trade association, or conduct additional research to find the most appropriate insurance coverage for your company. In addition, a New York State workers’ compensation policy may be obtained from the New York State Insurance Fund by calling 1-888-875-5790 and a disability benefits insurance policy may be obtained from the New York State Insurance Fund by calling 1-866-697-4332.
http://www.wcb.ny.gov/content/main/Carriers/3C_Consent_List.pdf
List of carriers New York will accept “all states coverage” in section 3C of Workers Compensation Policy. If your carrier is NOT on this list, you could ask the underwriter if the carrier could apply to get on the approved list.
http://www.wcb.ny.gov/content/main/Employers/noncompliancePenalty.jsp
Ascertaining Violations of the Law
The Workers’ Compensation Board may require an employer to furnish proof that the employer:
- Has a valid workers’ compensation insurance policy;
- Is self-insured for workers’ compensation; or
- Is legally exempt from having to obtain workers’ compensation coverage, and/or
- Is keeping proper, accurate business records.
If an employer fails to provide this information within 10 days following the Board’s request, under the WCL the Board is required to assume that the employer is violating the WCL. (WCL §52 [3])
Personal Accountability
The sole proprietor, partners or the president, secretary and treasurer of a corporation are personally liable for a business’ failure to secure workers’ compensation insurance.
Liability for Claims Incurred by an Uninsured Employer
Section 26-a says an employer is liable for a penalty of $2,000 per 10-day period of noncompliance, plus the actual award (including both compensation and medical costs), plus any other penalties the Board assesses for noncompliance. In cases involving severely injured employees, the medical costs alone could be in the hundreds of thousands of dollars per injury.
Obtaining coverage through the New York State Insurance Fund:
http://ww3.nysif.com/ (Please note there is NO COMMISSION PAYABLE to the agent if you use the NYSIF)
Request a quote: https://www.nysif.com/signup/default.aspx?t1=ShowQuote
Request a quote for Disability Benefits (also required under NY Law) https://dbl.nysif.com/quote/
Requesting a Quote for NYSIF Workers’ Compensation Insurance
You may request a NYSIF quote to apply for workers’ compensation insurance by using NYSIF eQuote. First, you have to create an online account, then provide the following information:
- Requested effective date of insurance;
- Full name(s) of employer(s) including trade name(s) or doing business as name(s);
- Employer(s) main NYS work location, county, mailing address;
- Name and address of insurance representative;
- How long has your client been in business?
- Has client ever been insured for workers’ compensation?
- Client’s latest experience modification factor and the effective rating date, if known;
- Has client been declined for coverage in the past 12 months?
- Has client ever been insured with NYSIF?
- Describe client’s operations including products/services;
- List client’s estimated annual payroll by type of work and duties for all employees.
In most instances, a premium quote will be returned within three business days.