One of the largest blind spots that I see on a regular basis when it comes to the insurance world is workers’ compensation coverage and audits. Not managing these policies correctly can be very painful for a business owner or organization.
My purpose in writing this is to help you through some of the potential exposures your business faces regarding workers’ comp coverage, and to share with you some strategies for setting up or managing your workers’ comp insurance policy.
The “Set it and Forget it” Method
One of the strategies I often see businesses use when it comes to their workers’ comp policy is the “set it and forget it” method. This type of strategy (if you can call it that), is never a good way of doing things.
It reminds me of the person that doesn’t open their mail, and pretends that the bills aren’t piling up. To be honest, I was that type of person during my younger years, but over time I realized that it just creates extra anxiety and stress that is completely unnecessary. This strategy of pretending is a sure way to fail.
Estimating your Payroll
There are three factors that go into determining your workers’ comp premiums. One of these factors is the size of the employer's payroll, and for growing businesses, it isn’t always easy to determine the payroll estimate. Growing businesses are busy and often changing quickly with new employees getting added to the payroll all the time.
This is when I often find companies utilizing the “set it and forget it” method. They have a million things to focus on, so they get their worker’s compensation policy setup, and then they forget all about it until their renewal paperwork starts rolling in or the audit hits! In my experience, this often leads to the big bad cancellation notice or an audit smack down, which again breeds panic and anxiety!
Here are a couple of ways to combat that mentality:
1.) Make sure to update your payroll throughout the year
The first strategy that we use with many of our clients is very simple and straightforward. We communicate what will happen throughout the year after they sign up for a worker’s compensation policy. This transparency leads to some additional conversation around putting together an annual plan.
We typically like to check in with our clients on a quarterly basis via phone to ask some simple questions about payroll numbers and how the company is doing. Believe it or not, this quick conversation allows us to adjust the payroll figures with the insurance carrier, which can help your business avoid a large premium audit at the end of the year.
2.) Another option is to run your payroll through a pay as you go system for workers compensation coverage. You pay for what you used that prior month and no more or no less. You can choose to run this through the carrier, or we can integrate it into our payroll system, which can pull taxes and corresponding premium for the workers compensation coverage.
These are just a few ways that we help businesses with their workers’ comp insurance. If you would like to discuss these or other strategies related to workers’ comp or payroll, fill out the form below.
Article by Jeff Mostek
With over 10 years of experience helping people solve complex insurance issues, Jeff is a dedicated professional with knowledge spanning numerous industries. While he is capable of helping all types of businesses with their insurance needs, he specializes in working with companies in the oil and gas, manufacturing, and construction industries.
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