INSURED – The business is a local hauler that handles towing risks. It has 25 employees and does approximately $1.5 million per year in business.
SITUATION – Following an audit of the insured’s Workers’ Comp policy, the company was charged an additional premium of $46,000. The company paid the first installment of the additional premium – $26,000 – and was now being called upon to make the second installment of $20,000.
ASSESSMENT – A CWCA who has been working with the insured for a number of years reviewed his client’s coverage and performed his own audit of the policy. He found that the insurer had incorrectly changed a classification on the audit that had resulted in the additional premium. Besides being the wrong classification for the position in question, the rules governing classification codes prevent them from being changed in the last 90 days of a policy, as was the case with this change. Initial contact with the insurer was met not with action, but rather with threats for non-payment of the second premium installment. He continued for several months to work out the situation with the carrier and to get them to admit to the mistake in the classification change.
SOLUTION – After several months with no result, the CWCA got NCCI involved. He had previously worked with NCCI to develop a program for towing risk classification codes – the very same program he had used for his version of the audit that had showed the incorrect change. He sent the results of the audit he performed that showed the code to be incorrect and also pointed out that the carrier should not have been allowed to make the change under the rules for classification code changes. After several more months, NCCI accepted the data and supported his claim that the classification change was incorrect.
RESULT – After more than 10 months of fighting the change to the insured’s classification code, the CWCA’s data finally led to NCCI ruling that the additional premium should only have been $5,000, not $46,000. The insured was instructed not to make the second payment of $20,000 and is now awaiting a return of premium check for $21,000. Although the carrier disputed NCCI’s decision, the CWCA says, “If I hadn’t gone to the Institute and learned the things I learned, I would have given up on this after a couple months. But based on what I learned I knew I was right, so I stuck with it, got the classification fixed and got my client’s premium reduced.”