THE CHALLENGE: The insurance carriers we like to work with deliver on their promises and put client interests above all else. Unfortunately, sometimes, even the best carriers will fall short. That's why we always have to stay vigilant. In this case, while carefully reviewing matters as the new brokers for a client, we made a discovery that left us simply … gobsmacked. The client was paying premiums on multiple workers’ compensation policies in each of the states where it was operating. Any company, regardless of how many states in which it operates, needs just one policy. But that wasn’t all. Our new client’s lost-time and medical claims for injured workers were being treated as separate events rather than one. (It may be worth noting that we’ve been in business more than 100 years and have caught and corrected plenty of mistakes but not one like this.) The result, as might be expected, was that our client was paying more in premiums than it needed to, on policies it never needed.
OUR SOLUTION: It didn’t take a Sherlock Holmes to figure things out. That something was amiss was fairly evident from the get-go. But getting things straightened out did require the finest of fine-tooth sleuthing. Perhaps unsurprisingly, the carrier initially didn’t seem overly excited to talk to us. We kept banging on its door, of course, and finally received an admission that multiple errors had occurred. It also assured us that it had been working on correcting things. That process included double-checking its Experience Modification Factor calculations for the client. Based on everything we had seen until that point, we knew it was probably a good idea for us to triple-check the carrier’s math. And, yes, we found more mistakes.
THE OUTCOME: Scheduled credits. That’s what those of us in the insurance business call discounts. Our new client was definitely due some, especially because so many of the issues we uncovered could have been prevented if only the carrier’s client management system had alerted it that it was issuing multiple identical policies to the same company covering roughly the same effective dates. To its credit, and thanks perhaps to our work, the carrier zeroed out the client’s balance for the year, saving it about $50,000. For a smaller company, that’s an amount that can make or break a year. But you can’t put a price on the principles at stake in this particular case.
The Mahoney Group is the largest independent insurance and employee benefits brokerage in Arizona. As an employee-owned organization, we’ve been protecting what’s yours since 1915. Contact us at email@example.com or 480-730-4920.
This article is not intended to be exhaustive nor should any discussion or opinions be construed as legal advice. Readers should contact legal counsel or an insurance professional for appropriate advice.