tag:blogger.com,1999:blog-2616310444343152362024-03-18T21:34:38.930-07:00WorkComp WatchWorkComp Watch: News about Workers' Compensation Insurance, audits, classifications, coverage, and recovering overcharges.Ed Prizhttp://www.blogger.com/profile/07231821197333304152noreply@blogger.comBlogger261125tag:blogger.com,1999:blog-261631044434315236.post-68389698751768710592023-11-22T09:44:00.000-08:002023-11-22T09:46:48.952-08:00Interesting Settlement in an Expert Case of Mine<p> I had recently been retained as an expert by the attorney for a specialized staffing company that had been fighting with a major insurance company for about a decade over Large Deductible Workers Comp premium charges. Prior to my retention, the case had not been progressing well for the policyholder. It was now in arbitration, and in spite of repeated attempts at settlement by the attorney, all such offers had been rebuffed by the insurer.</p><p>Interestingly, this was an insurer that had retained me as their own expert over the years, in multiple cases also involving Large Deductible Workers Compensation insurance policies for staffing companies. So I had some significant experience with the unique aspects of these policies and how this insurer underwrote those kinds of policies.</p><p>But it had been years since I had last done any work for this insurer and so I felt free to accept this assignment, although I still had to treat all my prior work and documents with confidentiality. </p><p>Nonetheless, I was able to offer a preliminary report about issues with how these particular Large Deductible premium charges had been computed.</p><p>And interestingly, once I was disclosed as the expert retained by the policyholder, and the particular areas about which I would be testifying, a curious thing happened.</p><p>The insurer settled the case, on terms described as very favorable by the attorney who had retained me.</p><p>I don't know any more than that, really. I have no clue why the insurer elected to settle this case at this time, after having fought tenaciously for so many years. I would like to think my involvement in the matter played some part in this, but I will never really know.</p><p>Still, I believe a just settlement was reached, and that's what matters. Of course, because this case settled before I could provide any sworn testimony, it won't even appear on my CV. But still, I feel good about this case, and my involvement in it.</p><p><br /></p>Ed Prizhttp://www.blogger.com/profile/07231821197333304152noreply@blogger.com0tag:blogger.com,1999:blog-261631044434315236.post-72949715890394137652023-09-29T10:30:00.001-07:002023-11-22T09:50:17.853-08:00The Self Checkout Lane for Workers Comp Audits<p> Today, I spent an hour or so helping a small business properly complete the self-audit forms their insurer had asked them to complete for Workers Comp and General Liability insurance. It wasn't particularly difficult but there were technical issues that were straightforward for someone trained in premium auditing but that were not so straightforward for a small business owner who didn't work in insurance.</p><p>We got the whole thing hashed out in a little over an hour and he was very grateful. But it put me in mind of something I heard a week or so ago, when I gave a presentation at the Midwest Insurance Auditors association. Some of the auditors present mentioned that their insurers are increasingly turning to remote audits or self-audits for smaller accounts.</p><p>The drawbacks of those developments are illustrated by my small business client I helped today--there are technical issues about what remuneration should properly be reported for WC, how that payroll properly gets allocated among classifications, and different technical aspects for the GL audit.</p><p>Insurance companies asking policyholders to self-audit reminds me of the increasing use of self-checkout lanes at Wal-Mart and other retailers. It's an aggravating action by large corporations to hold down their costs by asking the customer to do some of the work normally done by employees of said corporation.</p><p>Mind you, it's creating a new line of revenue for us, so perhaps I shouldn't complain about it. But it rubs me the wrong way. And when some aspect of the insurance industry rubs me the wrong way, I tend to write about it here.</p><p>So if your company gets one of these self-audit forms, or if the insurers says they want to do a remote audit (which can create similar but slightly different problems) keep in mind that Advanced Insurance Management can help, at very modest cost, to make sure you aren't inadvertently overcharged when you use the insurance industry's self-checkout lanes.</p><p>As I often like to say, in a perfect world I shouldn't be able to make a living doing what I do. Audits should always be done correctly and premiums should always be calculated correctly, by trained insurance professionals paid by the insurance industry.</p><p>Alas, we don't live in a perfect world. But at least we here at AIM can help make sure businesses aren't overcharged because of those imperfections.</p>Ed Prizhttp://www.blogger.com/profile/07231821197333304152noreply@blogger.com0tag:blogger.com,1999:blog-261631044434315236.post-31025033772465836842023-08-22T16:24:00.003-07:002023-11-22T09:51:10.406-08:00A Sweet Win at the Illinois Department of Insurance<p> <span style="background-color: white; color: rgba(0, 0, 0, 0.9); font-family: -apple-system, system-ui, BlinkMacSystemFont, "Segoe UI", Roboto, "Helvetica Neue", "Fira Sans", Ubuntu, Oxygen, "Oxygen Sans", Cantarell, "Droid Sans", "Apple Color Emoji", "Segoe UI Emoji", "Segoe UI Emoji", "Segoe UI Symbol", "Lucida Grande", Helvetica, Arial, sans-serif; font-size: 14px;">We just learned today we prevailed at a legal hearing at the Illinois Department of Insurance, on behalf of one of our consulting clients. This small biz client had been overcharged by Sentry Insurance, by way of using a wrong classification code (and thus wrong manual rate.) At the hearing, Sentry argued that, because this insured had accepted a proposal that used the wrong classification code, this meant that the clear policy provision that stated that Sentry would ultimately use the correct class for premiums, even if different from what was originally used, was null and void.</span></p><br style="background-color: white; box-sizing: inherit; color: rgba(0, 0, 0, 0.9); font-family: -apple-system, system-ui, BlinkMacSystemFont, "Segoe UI", Roboto, "Helvetica Neue", "Fira Sans", Ubuntu, Oxygen, "Oxygen Sans", Cantarell, "Droid Sans", "Apple Color Emoji", "Segoe UI Emoji", "Segoe UI Emoji", "Segoe UI Symbol", "Lucida Grande", Helvetica, Arial, sans-serif; font-size: 14px; line-height: inherit !important;" /><span style="background-color: white; color: rgba(0, 0, 0, 0.9); font-family: -apple-system, system-ui, BlinkMacSystemFont, "Segoe UI", Roboto, "Helvetica Neue", "Fira Sans", Ubuntu, Oxygen, "Oxygen Sans", Cantarell, "Droid Sans", "Apple Color Emoji", "Segoe UI Emoji", "Segoe UI Emoji", "Segoe UI Symbol", "Lucida Grande", Helvetica, Arial, sans-serif; font-size: 14px;">The hearing officer found this argument unpersuasive, it seems.</span><br style="background-color: white; box-sizing: inherit; color: rgba(0, 0, 0, 0.9); font-family: -apple-system, system-ui, BlinkMacSystemFont, "Segoe UI", Roboto, "Helvetica Neue", "Fira Sans", Ubuntu, Oxygen, "Oxygen Sans", Cantarell, "Droid Sans", "Apple Color Emoji", "Segoe UI Emoji", "Segoe UI Emoji", "Segoe UI Symbol", "Lucida Grande", Helvetica, Arial, sans-serif; font-size: 14px; line-height: inherit !important;" /><span style="background-color: white; color: rgba(0, 0, 0, 0.9); font-family: -apple-system, system-ui, BlinkMacSystemFont, "Segoe UI", Roboto, "Helvetica Neue", "Fira Sans", Ubuntu, Oxygen, "Oxygen Sans", Cantarell, "Droid Sans", "Apple Color Emoji", "Segoe UI Emoji", "Segoe UI Emoji", "Segoe UI Symbol", "Lucida Grande", Helvetica, Arial, sans-serif; font-size: 14px;">Kudos to my son and biz partner Scott Priz who ably handled this legal hearing. (It's nice to have a brilliant lawyer as part of our firm, one who also has twenty years' experience with the fine details of the classification system used for Workers Comp insurance. This wasn't a huge case in terms of our fee--but it was a huge win nonetheless, against an insurer who seemed determined to avoid returning significant premium overcharges to a small company.</span>Ed Prizhttp://www.blogger.com/profile/07231821197333304152noreply@blogger.com0tag:blogger.com,1999:blog-261631044434315236.post-85468635107398314212023-08-10T11:07:00.000-07:002023-11-22T09:51:25.896-08:00The Florida Nightmare for Employers and Workers Comp Premium Disputes<p> A while ago, I wrote about how, in Florida, there apparently is case law that establishes that a Florida employer that has been sued by an insurer over unpaid Workers Compensation insurance premiums cannot, at trial, raise the issue that the insurer calculated those insurance premiums incorrectly, unless the employer disputed those premium charges, before litigation, through the administrative process in Florida.</p><p>I've had the dubious pleasure of trying to raise such an administrative complaint on behalf of a Florida employer and have found it to be an administrative nightmare right out of Kafka.</p><p>NCCI, the non-governmental insurance industry outfit that writes manuals of rules used by insurers, has said they cannot accept this particular dispute. So I turned to the Office of Insurance Regulation. They in turn said I had to go to the division of Consumer Services, who in turn referred this to the Florida Department of Financial Services, Division of Workers Compensation--who in turn said they can't handle this, and said I should call OIR--the Office of Insurance Regulation--the people I had first filed this administrative complaint with, back in June.</p><p>So, Florida courts say that employers must go through the administrative process if they want to be able to later raise the issue of their insurance company screwing up the premium calculations, when that insurance company sues them. But that administrative process is not particularly well designed to actually let employers file such administrative complaints!</p><p>I'm recommending my Florida client reach out to his state representative to see if perhaps that can cut through this bureaucratic game of hot potato, but it's enough to make one suspect that perhaps the state of Florida just doesn't want employers to be able to dispute premium overcharges with insurance companies. </p><p>Stay tuned for further developments.</p><p><br /></p>Ed Prizhttp://www.blogger.com/profile/07231821197333304152noreply@blogger.com0tag:blogger.com,1999:blog-261631044434315236.post-11286168804019255572023-04-12T09:56:00.002-07:002023-11-22T09:52:12.053-08:00How Florida Screws Over Employers Who Have Been Overcharged for Workers Comp Insurance<p> The state of Florida have a (to my knowledge) unique no-win scenario that handicaps Florida employers who have been overcharged on their Workers Compensation insurance. If the employer declines to pay a Workers Comp insurance bill because the employer feels it is excessive and incorrect, and the insurer files suit against the employer, existing case law in Florida mandates that the employer cannot raise the issue of the insurance company miscalculating the premiums---<b>unless the employer had earlier attempted to dispute the overcharges by going through the Florida administrative appeal process.</b></p><p>Now, I'm not an attorney, so keep that in mind when I write about matters involving legal issues. But I often serve as an expert witness in litigation over Workers Compensation insurance premiums, so I have recently had the opportunity to witness a Florida court making exactly such a determination.</p><p>Every state has some kind of administrative appeal system for Workers Compensation insurance. Usually employers have an extremely limited awareness of the existence of such an appeal process. But in Florida, if the employer doesn't attempt to use that administrative appeal process BEFORE THE INSURANCE COMPANY FILES SUIT OVER THE PREMIUMS the employer cannot raise the issue of any errors by the insurance company in computing premiums, no matter how egregious and excessive those overcharges are.</p><p>In my own view, understandably, this is a disastrous situation for employers in Florida, as <b>overcharges in Workers Compensation insurance premiums are far from uncommon. </b>So these precedents in Florida case law essentially give insurance companies carte blanche to overcharge employers on Workers Comp insurance, as long as the insurer can get to the courthouse before the employer realizes there even exists an administrative appeal process.</p><p>My only advice for Florida employers is to be keenly aware of this situation and to be aware of the administrative appeal process. As Florida is an NCCI state, this means for most (but not all) disputes over Workers Compensation insurance premiums, the administrative appeal process would involve the Workers Compensation Appeal Board jointly administered by NCCI and the Florida insurance regulators. But NCCI appeal boards are limited in the kinds of technical issues they can hear. Typically, NCCI appeal boards can hear disputes over classifications, experience modification factors, payroll audits, and other NCCI manual rules. </p><p>But for other issues that can sometimes arise over Workers Comp premiums, including application of state statutes, NCCI appeal boards cannot provide relief. Those would have to be filed with the Florida insurance regulators, the Florida Office of Insurance Regulation.</p><p>And employers in Florida should make sure to reach out to those appeal mechanisms as soon as there is any dispute over Workers Comp premiums, lest their insurance company close the door on such administrative remedies by filing suit. Once suit is filed, administrative remedies cannot be sought and thus the employer is, to use a technical term, SOL.</p>Ed Prizhttp://www.blogger.com/profile/07231821197333304152noreply@blogger.com0tag:blogger.com,1999:blog-261631044434315236.post-28121343073108474572023-02-07T12:18:00.001-08:002023-02-07T12:18:43.275-08:00Another Big Win For a California Client<p> For this one, we were able to successfully dispute and get changed a Workers Comp classification code for a company in Hamilton Park, California. The State Compensation Insurance Fund had been seeking additional premium of around $400,000. By correcting the classification code, we reduced that bill to around $40,000. </p><p>Errors in classification code application are one of the major sources of premium overcharges and AIM has been helping employers fix those errors since 1987. </p>Ed Prizhttp://www.blogger.com/profile/07231821197333304152noreply@blogger.com0tag:blogger.com,1999:blog-261631044434315236.post-43600951616091077642022-12-20T06:28:00.004-08:002022-12-20T06:28:57.394-08:00Big Win For a California Client<p> We've just received word that we have been successful in drastically reducing the Workers <br />Comp audit bill for a California client. This small business specialized in providing life skills training for developmentally disabled adults, and they had been threatened with financial extinction by a bill for around $450,000.00 from the State Compensation Insurance Fund.</p><p>Our review found that this huge bill was based on using the wrong Workers Comp classification for this biz, and thus the wrong rate. And this wrong class was around ten times higher than the correct one.</p><p>We were able to get the correct lower rate approved for these folks and now the bill has been reduced to a much more manageable $44,000.00.</p><p>It's always gratifying when our efforts help save a small business from a ruinous bill, but it's especially so when the client is providing such an important and needed service.</p><p>On this case, my son and business partner Scott Priz handled the majority of the work, although I was involved, too, in some important aspects. So it was a team effort that helped produce this very happy ending for our client.</p><p>And just in time for the holidays!</p>Ed Prizhttp://www.blogger.com/profile/07231821197333304152noreply@blogger.com0tag:blogger.com,1999:blog-261631044434315236.post-21252314643682581912022-12-16T10:17:00.004-08:002022-12-16T10:17:43.377-08:00Successful Result for Georgia Small Contractor Regarding Workers Comp Audits<p> I recently got word that we had made a huge difference for a small Georgia contractor. Based on our presentation to the Georgia Workers Compensation Appeal Board, the audited premium amounts claimed by Travelers insurance were drastically reduced. The appeal board agreed that the insurer had used incorrect classifications and rates and also had used incorrect payroll amounts, computing the $700,000 premium charges the Onwardsought.</p><p>The corrections should reduce the premiums by more than half, and help keep this Atlanta small business operational.</p><p>We love helping small businesses dispute improper and excessive Workers Compensation insurance bills, and Georgia of late has seen a number of such cases finding their way to us. Onward to the next one!</p>Ed Prizhttp://www.blogger.com/profile/07231821197333304152noreply@blogger.com0tag:blogger.com,1999:blog-261631044434315236.post-23592405034866459812022-10-27T10:53:00.000-07:002022-10-27T10:53:08.288-07:00Facebook Workers Comp Scam<p> It's being <a href="https://whnt.com/taking-action/bbb-consumer-alerts/what-to-do-if-your-facebook-friend-claims-youre-owed-workers-comp/" target="_blank">widely reported</a> that there is a new Workers Comp-related scam happening on Facebook. In this scam, a crook impersonates someone's existing friend on Facebook and, via Messenger, says they spotted the victim's name on a list of people owed money from some kind of Workers Comp fund.</p><p>They have you call a number where you talk with an official-sounding person. But at some point, you will be asked to pay a small fee in order to get your big payout..</p><p>It's a classic scam, and I suspect most readers of this blog would be unlikely to fall for it. But you may have friends and family who might just be tempted by this fraudulent payday. </p>Ed Prizhttp://www.blogger.com/profile/07231821197333304152noreply@blogger.com0tag:blogger.com,1999:blog-261631044434315236.post-23096359460294428782022-08-23T07:32:00.001-07:002022-08-23T07:32:09.941-07:00Another Georgia Assigned Risk Workers Comp Audit Finally Fixed<p> We just got word we have successfully reduced a Workers Comp audit bill for a Georgia small business client, down from the original $170,121 to $9,660. The insurance company had already turned this over to a collection agency before we got involved and that collection agent had been seeking that wildly inflated premium bill since last year. Fortunately, there are provisions to suspend such collection efforts while an audit is being disputed, and we made sure this client got the benefit of that while we worked to correct all the mistakes in this audit.</p><p>Around our shop, we call these situations<b> Shock Audits</b>, and this case neatly exemplifies how extreme these overcharges can be.</p><p>This was another Shock Audit from the Georgia Assigned Risk program--we've been seeing a lot of those, for some reason. Assigned Risk policies can be particularly perilous for small businesses, as the insurance agents who sell these policies typically aren't too much help in disputing these audits, even with the best of intentions. In the Assigned Risk plan, the agent has just about no real leverage with the insurance company and usually lacks the technical expertise to fight these excessive audits effectively.</p><p>And some of the insurers who issue these Assigned Risk policies, it seems, have been getting rather carried away in doing these premium audits, as this case illustrates. If not for our assistance, the usual course would have seen this insurer filing a lawsuit for this excessive amount, once the collection agent was unsuccessful (and he would have been, as this small business had no chance to pay that hugely inflated audit bill.) And that likely would have been the end of this small business.</p><p>Instead, the fair and proper premium has been paid, and this small contractor gets to continue.</p><p>As I like to say, <b>we don't sell insurance--we fix it.</b></p><p><br /></p>Ed Prizhttp://www.blogger.com/profile/07231821197333304152noreply@blogger.com0tag:blogger.com,1999:blog-261631044434315236.post-67708280979785667562022-08-05T07:32:00.002-07:002022-08-05T07:32:21.251-07:00A Somewhat Unusual Phone Call This Morning<p> Got a call this morning from the UK, which is somewhat unusual for me, as my specialty is consulting on the US system of Workers Comp insurance pricing. But this caller said that his company had recently purchased a US-based operation, and had some questions about our somewhat unique system.</p><p>The American system of Workers Comp coverage, using private insurance companies to a great extent, is different from what is done in most other places, after all. This caller wondered about why the manual rates on his policy were significantly higher than NCCI rates would suggest.</p><p>I got to explain the modern development where, in most states, insurers are allowed, and even encouraged, to file and use their own manual rates for Workers Comp, often using NCCI rate components as a base but ultimately coming up with their own particular schedule of rates. This is in marked contrast to the way things were in the halcyon days when I first began working with Workers Comp insurance, back in 1978.</p><p>Back then, most states required insurers to all use a single schedule of manual rates. The theory, back then, was that price competition might not be in the best interest of the system's stability. But that began to change, and change rapidly, in the very early 1980s.</p><p>Nowadays, the operating theory is that "price competition" will benefit employers and help hold down insurance costs. Regulators thought this would even reduce the need for oversight of Workers Comp insurance, with a somewhat naive faith in the power of the marketplace.</p><p>The pricing of Workers Comp insurance is complex enough so that insurers very quickly figured out how to turn this "competitive rating" system to their advantage. It is now common, in voluntary market policies, for an insurer to underwrite via a "loss pick"--forecasting the losses they expect an employer to have during an upcoming policy and then determining what premium they need to charge so that the account will be profitable.</p><p>The insurer then essentially works backwards from that premium, figuring out how to utilize classifications, manual rates, and other rating factors to have the premium come out to where they want it.</p><p>This rather turns the carefully-constructed system of WC premiums on its head, of course. And makes it difficult for policyholders to truly comparison shop, because the pricing system is now fundamentally opaque in important ways.</p><p>In our consulting work, of course, we manage to still figure things out, and I guess I could be thankful that the insurance industry has made things so that it requires an outside expert to figure out if they're being overcharged. Heck, they inadvertently created my life's work, as I've now spent more than half my life (and the majority of my working life) doing exactly that--identifying and correcting the hidden overcharges the US system is prone to.</p><p>It's been an interesting career, and it's (God willing!) far from over. Nowadays, we're busier than ever, figuring out the latest ways some insurers have devised to generate higher premiums, all while making it harder to figure out their pricing mechanisms.</p><p>It's a unique niche, I suppose, but it suits me. And people like my UK caller seem to appreciate my efforts. Employers like us, it seems, even if insurers sometimes don't.</p>Ed Prizhttp://www.blogger.com/profile/07231821197333304152noreply@blogger.com0tag:blogger.com,1999:blog-261631044434315236.post-29054790921889088402022-03-09T10:32:00.003-08:002022-03-09T10:32:46.901-08:00Weaponizing Workers Comp Insurance Against Small Business<p> <span style="background-color: white; color: #1a1a1a; font-family: Spectral, serif, -apple-system, BlinkMacSystemFont, "Segoe UI", Roboto, Helvetica, Arial, sans-serif, "Apple Color Emoji", "Segoe UI Emoji", "Segoe UI Symbol"; font-size: 19px;">In just the past week, I’ve been contacted by multiple small businesses, located in disparate states, with a shared problem: their insurance company is trying to put them out of business.</span></p><p style="background-color: white; color: #1a1a1a; font-family: Spectral, serif, -apple-system, BlinkMacSystemFont, "Segoe UI", Roboto, Helvetica, Arial, sans-serif, "Apple Color Emoji", "Segoe UI Emoji", "Segoe UI Symbol"; font-size: 19px; line-height: 1.6em; margin: 0px 0px 1em;">Now, of course, that isn’t really the primary objective of these huge insurance companies. It’s just that they don’t give a shit. They think they are owed money for Workers Comp insurance—a lot of money, in fact—and thus these financial giants have put in motion their standard operating procedures for obtaining what they believe is owed them.</p><p style="background-color: white; color: #1a1a1a; font-family: Spectral, serif, -apple-system, BlinkMacSystemFont, "Segoe UI", Roboto, Helvetica, Arial, sans-serif, "Apple Color Emoji", "Segoe UI Emoji", "Segoe UI Symbol"; font-size: 19px; line-height: 1.6em; margin: 0px 0px 1em;">And that is how Workers Comp insurance gets weaponized into a very efficient financial equivalent of a thermobaric bomb.</p><p style="background-color: white; color: #1a1a1a; font-family: Spectral, serif, -apple-system, BlinkMacSystemFont, "Segoe UI", Roboto, Helvetica, Arial, sans-serif, "Apple Color Emoji", "Segoe UI Emoji", "Segoe UI Symbol"; font-size: 19px; line-height: 1.6em; margin: 0px 0px 1em;">Consider one of these cases, a small construction company in Georgia. This company was required by state law to buy Workers Compensation insurance, so they reached out to a local insurance agent. They were a small company so the insurance agent placed them into what’s known as the Assigned Risk Plan—a state-sanctioned insurance industry mechanism that accepts all applicants, even very small businesses that insurers aren’t normally much interested in.</p><p style="background-color: white; color: #1a1a1a; font-family: Spectral, serif, -apple-system, BlinkMacSystemFont, "Segoe UI", Roboto, Helvetica, Arial, sans-serif, "Apple Color Emoji", "Segoe UI Emoji", "Segoe UI Symbol"; font-size: 19px; line-height: 1.6em; margin: 0px 0px 1em;">The premium charge for that policy was $1,500.00.</p><p style="background-color: white; color: #1a1a1a; font-family: Spectral, serif, -apple-system, BlinkMacSystemFont, "Segoe UI", Roboto, Helvetica, Arial, sans-serif, "Apple Color Emoji", "Segoe UI Emoji", "Segoe UI Symbol"; font-size: 19px; line-height: 1.6em; margin: 0px 0px 1em;">At the moment, the insurer is now seeking, years after the policy ended, over $700,000 from this small business, for that $1500 policy and the subsequent policy (which the small biz also bought for about $1500).</p><p style="background-color: white; color: #1a1a1a; font-family: Spectral, serif, -apple-system, BlinkMacSystemFont, "Segoe UI", Roboto, Helvetica, Arial, sans-serif, "Apple Color Emoji", "Segoe UI Emoji", "Segoe UI Symbol"; font-size: 19px; line-height: 1.6em; margin: 0px 0px 1em;">So a small and unsophisticated construction business bought two Workers Comp policies, policies that state law required them to buy, and now, years after those policies ended, they are on the receiving end of a bill for over $700,000.00.</p><p style="background-color: white; color: #1a1a1a; font-family: Spectral, serif, -apple-system, BlinkMacSystemFont, "Segoe UI", Roboto, Helvetica, Arial, sans-serif, "Apple Color Emoji", "Segoe UI Emoji", "Segoe UI Symbol"; font-size: 19px; line-height: 1.6em; margin: 0px 0px 1em;">This is not an aberration. This is not some weird one-off situation. This is an everyday occurrence. I know, because I get calls and emails almost every day from small business owners in the same kind of situation.</p><p style="background-color: white; color: #1a1a1a; font-family: Spectral, serif, -apple-system, BlinkMacSystemFont, "Segoe UI", Roboto, Helvetica, Arial, sans-serif, "Apple Color Emoji", "Segoe UI Emoji", "Segoe UI Symbol"; font-size: 19px; line-height: 1.6em; margin: 0px 0px 1em;">Around our office, we call them Shock Audits.</p><p style="background-color: white; color: #1a1a1a; font-family: Spectral, serif, -apple-system, BlinkMacSystemFont, "Segoe UI", Roboto, Helvetica, Arial, sans-serif, "Apple Color Emoji", "Segoe UI Emoji", "Segoe UI Symbol"; font-size: 19px; line-height: 1.6em; margin: 0px 0px 1em;">It is difficult to imagine any other industry where this sort of thing could occur, much less be commonplace. Insurance, after all, is supposed to be regulated by state agencies. And Workers Compensation is, according to insurance industry spokespeople, the most highly regulated line of insurance.</p><p style="background-color: white; color: #1a1a1a; font-family: Spectral, serif, -apple-system, BlinkMacSystemFont, "Segoe UI", Roboto, Helvetica, Arial, sans-serif, "Apple Color Emoji", "Segoe UI Emoji", "Segoe UI Symbol"; font-size: 19px; line-height: 1.6em; margin: 0px 0px 1em;">And yet.</p><p style="background-color: white; color: #1a1a1a; font-family: Spectral, serif, -apple-system, BlinkMacSystemFont, "Segoe UI", Roboto, Helvetica, Arial, sans-serif, "Apple Color Emoji", "Segoe UI Emoji", "Segoe UI Symbol"; font-size: 19px; line-height: 1.6em; margin: 0px 0px 1em;">We have a system that often drives small employers out of business, or saddles them with huge unexpected costs, for something that they are required to purchase. A system that routinely sells an insurance product that is priced very low at the outset, only to balloon outrageously after the policy has ended.</p><p style="background-color: white; color: #1a1a1a; font-family: Spectral, serif, -apple-system, BlinkMacSystemFont, "Segoe UI", Roboto, Helvetica, Arial, sans-serif, "Apple Color Emoji", "Segoe UI Emoji", "Segoe UI Symbol"; font-size: 19px; line-height: 1.6em; margin: 0px;">Stay tuned for more information to come on this subject.</p>Ed Prizhttp://www.blogger.com/profile/07231821197333304152noreply@blogger.com0tag:blogger.com,1999:blog-261631044434315236.post-39840249040074915182021-03-22T19:08:00.001-07:002021-03-22T19:31:00.786-07:00Today's Workers Comp Shock Audit Phone Calls<p> As I have often written in the past, it's a rare day at my office that we don't get a phone call or email about a Workers Comp "Shock Audit" from some employer, somewhere in the U.S. Today I got two.</p><p>The first one, this morning, was from a small biz in New York. This gentleman operates an import/export type logistics business. He insured his business through the New York State Insurance Fund, and bought a policy for only a few hundred dollars, as he was the only worker at his company. Or so he thought.</p><p>He called me because he now has a "Shock Audit" from SIF for $50,000. He's not absolutely sure how SIF managed this bit of legerdemain but it appears to involve him being charged for when he hired independent trucking companies to move some goods and he didn't get Certificates of Insurance from them.</p><p>I think we can likely help him straighten this out, once we get all the documents and paperwork from him regarding this Shock Audit. Most of these trucking companies didn't even operate in New York State, so it does make one wonder how an insurer that only insures an employer's New York liabilities is charging premium for those trucking companies. My initial impression is that there is a very good chance we can help reduce this audit bill substantially.</p><p>The second call I got today, though, is even more extreme. The call was from a non-profit agency in Georgia, an agency that helps Hispanic businesses. The Shock Audit involves a small roofer who bought a policy for around $1,000 and now has an audit bill of $600,000.00.</p><p>Yeah, that's not a typo. The non-profit is going to serve as a translator tomorrow, as the small business owner isn't fluent in English. Interestingly, the non-profit person who called me said this is far from the only such case they've seen like this. It appears these Shock Audits have been clobbering an awful lot of small businesses.</p><p>As Harry Bosch put it, you have to follow the facts. So I can't yet say what the odds are of helping this second Shock Audit. But based on other, similar cases I've seen in recent years, I have some expectations of what might have happened. We'll find out tomorrow if my theories hold water or if the insurer found some new and innovative ways to turn a $1,000 policy into a $600,000 audit bill.</p><p>I only know this. If there are errors in these audits, we will find and reverse them. Because that's what we do.</p><p><br /></p>Ed Prizhttp://www.blogger.com/profile/07231821197333304152noreply@blogger.com0tag:blogger.com,1999:blog-261631044434315236.post-68024883375786672742021-02-06T11:42:00.003-08:002021-02-06T11:42:48.776-08:00Forty-Three Years Working With Workers Comp Insurance--Some Observations<p> I started in the wonderful world of Workers Compensation insurance--still often called "Workman's Compensation" back then--in 1978, working at the late, lamented insurer American Mutual. American Mutual had, according to the company lore, written the very first "Workman's Compensation" insurance policy in the U.S., back in 1911. The company specialized in what we now call "Workers Compensation" insurance, and so they provided a very thorough training program to their Industrial Account Representatives, as they called their in-house insurance producers. They shipped me out from our offices in Chicago to a classroom they ran out by the Home Office near Boston, for an intensive three week course covering the fundamentals of underwriting, pricing, and auditing this unique line of insurance. </p><p>That course was taught by a remarkable guy named Don Barber, who had an engaging and energetic way of covering materials that, in other hands, might have been dry as dust. </p><p>Here I am, forty-three years later, still working with Workers Compensation insurance every day, and still using many of the lessons Don Barber tried to teach us, all those years ago. And yet, a great many things have changed in the field. Not all of them for the better, I think, although a great many of those changes have produced genuine benefits for many. Occasionally, those changes even serve the interests of the employers who have to buy the insurance. But some of those changes have eroded important things that were once viewed as inviolable principles that were fundamental to Workers Comp insurance.</p><p>The biggest change I've observed over these forty-three years is the erosion of regulatory oversight and control over insurance companies, along with significant changes in underwriting practices.</p><p>Back in the day, Workers Comp insurance was pretty closely regulated. Every company had to use the same rates, the same classification rules, the same experience rating rules. Innovation was discouraged, as it was felt that it was more important to maintain uniformity and predictability for policyholders, and to preserve financial strength for insurers.</p><p>But starting in the 1980s things began to change. Insurance regulators moved to allow price competition in Workers Compensation insurance, something that had been virtually impossible before. In 1978, American Mutual and other insurers differentiated themselves largely by the services they could provide for loss control, as pricing was pretty uniform. Then American Mutual introduced a rather revolutionary kind of policy, a sliding scale dividend policy that offered smaller employers the possibility of premium returns if losses were favorable--a feature previously only available to larger employers who were eligible for Retrospective Rating plans.</p><p>Then regulators in various states began to allow actual competition on filed rates and greater use of schedule rating. In Illinois, an insurer named Casualty Insurance Company took early advantage of these changes, filed their own manuals and radically different rates, and very quickly grew from nothing to the largest Workers Comp insurer in the state.</p><p>It took a while for more traditional insurers to catch on. I remember American Mutual seeing its book of Illinois business rapidly decline as Casualty swooped in and took policyholder after policyholder away. The oldest writer of Workers Comp insurance didn't realize it right away, but their days were numbered.</p><p>Today, most states don't really have much real oversight over Workers Compensation insurance pricing. They review and approve manual rules produced by rating bureaus like NCCI and WCIRB but there it often is a bit of a Potempkin Village these days. In my home state of Illinois, the Department of Insurance has seen an exodus of those who had real experience and knowledge of Workers Comp insurance. An older generation of regulators has retired or been forced out through budget cuts and those remaining, even with the best of intentions, are overworked and under supported by higher ups.</p><p>So the trend has been for insurers to underwrite policies without so much regard to figuring out things like correct classifications for a particular employer. I've seen sworn testimony from insurance company personnel that the prevailing attitude is to issue policies without exercising any real judgement about classifications initially used on a policy, with the thought that any errors can simply be caught on the audit.</p><p>That kind of attitude sets up employers for frighteningly expensive "Shock Audits" where classifications (or allocation of payroll among classifications) is changed after a policy ends, leaving an employer with a massively higher premium bill for a policy that's already expired.</p><p>It also fostered the environment where an insurer could market a program like EquityComp, where the details governing the ultimate cost of the insurance policy were so complex as to be incomprehensible to employers and even many of the insurance agents selling the policies. This ended in tears for many employers, when very large bills for additional premium came in and the explanations for those costs may as well have been an explanation of quantum mechanics. In Esperanto.</p><p>It's also fostered the huge growth of complex Large Deductible policies as well, where the ultimate cost of the insurance is determined by complex and proprietary formulas that are often poorly understood by those buying the insurance. It's only when the bill for huge additional premiums arrive that some employers start to realize they didn't really understand the pricing of the policies they purchased, to their eventual regret.</p><p>And even in smaller policies through Assigned Risk plans in many states, the concept of underwriting only at the time of the audit is a common one, causing Shock Audits a'plenty for smaller employers who often have only a very rudimentary understanding of this line of insurance. And insurance regulators typically can offer only very limited assistance when those Shock Audits threaten the existence of a small employer, because of deregulation and diminished authority and staff at many insurance regulatory agencies.</p><p>So in forty-three years, Workers comp insurance has gone from being tightly regulated (arguably too regulated, perhaps) to something that is, in this writers view, almost unregulated, in a practical sense. Policy forms are still filed, rates are still reviewed, but too much emphasis has been placed on using competition alone to regulate the pricing of Workers Compensation insurance. While that approach can offer some benefits, it also encourages large and powerful insurance companies to take advantage of employers, especially small employers, in the pricing of insurance that is a required purchase for most businesses.</p><p>Insurance regulators have been gradually enfeebled and hobbled in many states, and while this might make life easier for insurance companies it has not, in my view, been in the interests of employers.</p><p><br /></p><p><br /></p><p><br /></p><p><br /></p>Ed Prizhttp://www.blogger.com/profile/07231821197333304152noreply@blogger.com0tag:blogger.com,1999:blog-261631044434315236.post-30059550652715923242021-01-21T15:00:00.001-08:002021-01-21T15:00:53.467-08:00Nebraska Legislators Introduce Covid-19 Workers Comp Presumption<p> Out in Nebraska, legislators have filed a bill to make COVID-19 infections presumed to be compensable for first responders and other designated types of workers. Now, so far, I've been unable to find specifics about which categories of workers are included in this bill--which has not yet been passed into law, btw. </p><p>The other interesting aspect of this bill is that is specifies that no COVID-19 case can increase an employer's Workers Compensation insurance premiums, or experience rating, or modifier. So that should be an interesting thing to handle behind the scenes, if the bill passes as currently written.</p><p>Stay tuned for more details as I can find them out.</p><p><br /></p>Ed Prizhttp://www.blogger.com/profile/07231821197333304152noreply@blogger.com0tag:blogger.com,1999:blog-261631044434315236.post-44982462641565824022021-01-18T12:51:00.001-08:002021-01-18T12:51:14.455-08:00Another Shock Audit Illustrates What's Wrong With Workers Comp For Small Biz<p> I know I sound like a broken record, going on about these Shock Audits for Workers Comp we see just about every day from some small employer somewhere in the U.S. But I keep writing about it because it is such a widespread problem and yet is on no one's radar screen.</p><p>So this particular small biz is from my home state of Illinois. He was in the construction biz, doing home remodels and he bought an Assigned Risk policy. The policy was sold to him as a Minimum Premium policy with premium of $1,500 and ran from 6-15-2019 through 6-15-2020. After the policy ended, the insurance company sent out an auditor. And after the auditor was done, that $1,500 policy had turned into a bill for $179,070.</p><p>Can you imagine any other business service a small biz might purchase that could legally get away with that?</p><p>The worst thing is that, for this particular Shock Audit, there doesn't appear to be a lot I can do to reduce the bill. Because everything appears to have been done according to the rules. It's just that the rules suck.</p><p>Let me be more specific. The rules are largely written by the insurance industry, for the interests of the insurance industry. And that's why a small business owner can be sold a policy for $1,500 and then, a year later, get a bill for $179,070.</p><p>That's because, in Illinois (and most other states) independent contractors paid on a 1099 basis get treated, for Workers Comp insurance purposes, just the same as regular W-2 workers. And this particular business used a fair amount of 1099 labor during the policy.</p><p>Only nobody explained that to this small business when the policy was sold. And nobody's required to explain it. And in the normal course of the insurance business no one does explain it.</p><p>This small biz is based in Chicago. The policy was sole by a small agency out in Frankfort, Illinois, way out in the south suburbs. And because it's an assigned risk policy, the agent makes very little money in commissions. But if you sell a lot of these tiny minimum premium policies I suppose you can make a bit of money.</p><p>But agents don't typically spend much time with such accounts--who could afford to? But that means these insurance agents are just order-takers. Order takers who commonly don't take the time to explain to these tiny accounts about the potential for these Shock Audits.</p><p>And because insurance agents aren't required to be anything more than order takers (unless they voluntarily start to offer advice, thus creating some additional professional duties) the small business owners who use their services don't really have any recourse against the agents who sold them these policies.</p><p>Yes, insurance agents aren't legally treated the same as other professionals like an accountant or attorney, even though many insurance agents aspire to similar professional status. So unless the agent can be shown to be acting as an insurance advisor, in addition to just selling insurance as an order taker, the small biz owner on the receiving end of one of these Shock Audits has no recourse against the agent who sold the policy.</p><p>And the insurance company? Heck, they're just charging the premium that's really due under the rules. Too bad the system allows these minimum premium policies to be sold without making sure somebody is really explaining how these Shock Audits can happen.</p><p>Insurance companies and agents aren't required to provide any simple and clear warnings about this at the time the policy is sold. But insurance companies sure do love to provide lots of explanations after the policy has ended and they are trying to collect one of these huge Shock Audit premiums.</p><p>See what I mean about the rules being largely designed for the interests of the insurance industry?</p><p>Now, fortunately, a lot of times I can find ways to reduce these audits, because the insurance system still manages to build in overcharges into these audits a lot of times, overcharges based on errors in classifications or payroll determination or experience modifiers. But I can't help all victims of Shock Audits, alas.</p><p>And so, pretty much every day, I get a phone call or email about another Shock Audit.</p>Ed Prizhttp://www.blogger.com/profile/07231821197333304152noreply@blogger.com0tag:blogger.com,1999:blog-261631044434315236.post-56143566801342142062020-12-07T16:14:00.001-08:002020-12-07T16:14:34.767-08:00The Shock Audits Keep On Coming<p> I know I've visited this subject before, but it bears repeating. Just today, I had two more small contractors reach out to me, each one a small employer crushed under a Workers Compensation insurance Shock Audits--where the premium developed after the policy has ended is far, far larger than the employer ever anticipated, based on the original policy premium.</p><p>One was an email from a Chicago small contractor, who bought a Workers Comp policy for $1,515.00, but who has now received an audit bill for $177,555.00 in additional premium for the policy.</p><p>The problem, as it often is, was that no one explained to this small business that payments to subcontractors would be picked up just the same as payments to regular direct employees of his company. This small biz had purchased an Assigned Risk policy, with Minimum Premium, and as is so common in such situations the insurance agent had not taken any time to explain the potential for this particular trap.</p><p>Agents who sell Assigned Risk policies to tiny employers often don't spend much time and effort explaining how the premium charges will ultimately be computed, after the policy has ended. And so these tiny employers are left thinking their Workers Comp insurance will cost only $1,500 or so in premium, only to be traumatized when they get the Shock Audit billing, after the policy has ended.</p><p>You might think such small employers might have a basis for holding the insurance agent responsible for this SNAFU, but that is not such an easy proposition.</p><p>Unlike professionals like accountants or attorneys, insurance agents typically have a much lower professional responsibility, generally. As long as the agent obtains the insurance requested, or explains that it can't be obtained, and doesn't steal money from the insured, the agent's professional responsibilities are generally viewed as having been satisfied--unless, and it is a big unless, the agent has voluntarily started serving as an insurance advisor or otherwise voluntarily taken on greater duties towards a client. But absent that, insurance producers typically have a very low level of professional responsibility.</p><p>And when producing Assigned Risk Workers Comp policies for tiny clients, agents often just don't spend much time or effort advising clients about potential problems with the insurance.</p><p>So in this case, it doesn't appear the insurance company is necessarily wrong with this huge additional premium increase--although I'm still checking it to see if there are any potential avenues for reducing the bill--it's just that the insurance industry operates in such a way that these Shock Audit scenarios happen commonly.</p><p>I know, because I get the phone calls and emails when the bill arrives, every darn day. Sometimes I can help reduce the bill. Sometimes not. The devil is always in the details.</p><p>But it shouldn't be such an issue for small employers. Obtaining Workers Comp insurance should not constitute an existential threat to small business, and yet it does, surprisingly often.</p><p>Insurance companies tend to assume insurance agents explain all this stuff at the outset. They also assume most business people, even really small business managers, already understand these details.</p><p>Based on all these calls and emails, those assumptions too often don't hold up, with tragic results for small business.</p><p>My second Shock Audit contact today was from a Massachusetts small contractor. I'll cover that one in a separate post.</p><div class="separator" style="clear: both; text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEjV8Hckqj7DDLWzmTFv8WFxItnSPJZU5oynzFeiCP9PPhO9YGysolxoCSgnQmBVmsTALpQAQbWS-3vY_NzJ_RMb0Z0iTMD-oaMo1L8otAUSO-HEXaxJOaddLYaW1b7h0fDEXZNhg4HzCvSZ/s1824/shock+audit+drawing2.jpg" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><img border="0" data-original-height="1218" data-original-width="1824" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEjV8Hckqj7DDLWzmTFv8WFxItnSPJZU5oynzFeiCP9PPhO9YGysolxoCSgnQmBVmsTALpQAQbWS-3vY_NzJ_RMb0Z0iTMD-oaMo1L8otAUSO-HEXaxJOaddLYaW1b7h0fDEXZNhg4HzCvSZ/s320/shock+audit+drawing2.jpg" width="320" /></a></div><br /><p></p><p><br /></p><p><br /></p>Ed Prizhttp://www.blogger.com/profile/07231821197333304152noreply@blogger.com0tag:blogger.com,1999:blog-261631044434315236.post-32861251854274860392020-11-14T13:29:00.005-08:002020-11-14T13:33:47.274-08:00Staffing Companies and Workers Comp Classifications and Premiums<p> Recently, I was approached by a staffing company looking for assistance in figuring out correct Workers Compensation classification codes for the workers they were placing at a variety of client companies all across the U.S. I can certainly understand why this staffing company is seeking such assistance, as figuring out correct Workers Compensation classifications can be vital for a staffing company's financial well being. Staffing companies have some unique exposures to serious problems with Workers Comp insurance costs, mainly due to issues involving determining correct Workers Comp insurance classifications.</p><p>The staffing industry in the U.S. is composed of two distinct kinds of labor placements and it is not uncommon for a single staffing company to blend and blur those two kinds of labor placements in a single business enterprise.</p><p>The first is the sort of temporary labor placement that has historically been common--supplying workers on a "temporary" basis to third party employers. Originally such labor placements were truly temporary, providing "temps" to replace workers on vacation or for similar short-term engagement. In more recent years such placements have commonly involved providing workers for longer periods of time, sometimes as a trial period before selecting workers to become permanent additions to an employer's workforce, but sometimes serving as a more long term source for outsourced labor, although the individual workers provided may typically change over time. One common example of this kind of labor placement is where a staffing company provides warehouse workers to a client company on an ongoing basis. The individuals making up that outsourced labor force may vary over time but the contractual relationship between the staffing company to the client company can be a long-standing one.</p><p>The second kind of labor placement in the staffing industry is what has come to be called a PEO arrangement--a Professional Employer Organization, in the parlance of the staffing industry. This is an arrangement where existing employees of a client company contractually become "co-employed", at least on paper, with an outside staffing company. This contractual arrangement provides a legal basis for the staffing company to be able to provide Workers Compensation insurance coverage to workers at a client company, as well as the basis for the staffing company to provide other services such as withholding and reporting taxes for those workers. But the provision of Workers Compensation insurance to client companies is often the most important service provided by a PEO type staffing company.</p><p>In a typical PEO arrangement, the PEO staffing company charges fees for their services that are based, in large part, on the cost of providing Workers Compensation insurance (along with costs of providing other services that may be part of the contract, and provisions for overhead and profit for the PEO.)</p><p>But this means the PEO staffing company must anticipate what their cost of Workers Compensation insurance actually is for workers at a client company. And since the fees charged to those client companies are a separate contractual arrangement from the insurance coverage purchased by the PEO, a potential exists for a dangerous mismatch to occur (dangerous from the point of the view of the PEO and also from the point of view of the insurance company.)</p><p>This same kind of dangerous mismatch can apply to the more traditional "temp' type of staffing company as well, because the fees charged to clients typically also include a significant component for the cost of Workers Compensation insurance.</p><p>If the staffing company operates on the assumption that workers being provided are doing clerical work, and thus should be classified in the inexpensive clerical class for Workers Compensation insurance, but the insurance company later concludes that those workers actually belong in a more expensive classification, the staffing company can be left in a position where it cannot retroactively adjust the fees it has charged the client, but the insurance company can (and often does) retroactively adjust the premium charged for those workers.</p><p>I remember a case where the staffing company classified workers as clerical, because they were doing things like collating printed documents together and stapling those pages together. But at the end of the year, when the insurance company did the premium audit for the Workers Compensation insurance policy purchased by the staffing company, the insurer's auditor learned that those workers were doing that collating work not in an office environment but in a warehouse area at the client company. The insurance company decided this meant those workers properly did not qualify for the inexpensive clerical class but instead in a significantly more expensive class for warehouse workers.</p><p>This left the staffing company in a difficult position. Since insurance companies often only really determine classifications after the insurance policy has ended, when an audit is done, the staffing company had priced their fees to this client based on using the clerical rate for Workers Comp insurance. By the time the insurance company performed the premium audit, a year had passed with the staffing company charging fees that turned to be inadequate to cover the cost of Workers Comp insurance. Overnight, this turned a profitable account into a very unprofitable account.</p><p>A staffing company can often have hundreds of different client companies, each one carrying the potential for such a classification error. Under the rules that govern Workers Compensation insurance, workers provided by a staffing company are supposed to be classified based upon treating those workers as if they were direct employees of the client company. So a staffing company needs to try and determine the correct classification for all those client companies. And often those client companies may be scattered across different states--and the classification definitions can sometimes vary significantly between states. What is a correct class in one state for a type of business might not be the correct class in another.</p><p>Complicating things even further, some staffing companies in recent years have engaged in a controversial practice of providing "staffing on staffing" coverage, where one staffing company enters into a PEO style contractual arrangement with another staffing company, and it is this second staffing company that actually places workers with client companies. This practice increases the chances of a classification mismatch occurring, as the staffing company obtaining the Workers Comp insurance does not have a direct relationship with the client company and thus can lack a proper understanding of the nature of the client's business operations.</p><p>Insurance companies, in my experience, do not wish to insure staffing companies engaging in this kind of "staffing on staffing" business but it can be difficult for the insurer to determine if this practice is happening, at least, not at the time the policy is being "underwritten" and produced. Such issues are typically only uncovered at the time an audit is conducted, after a policy has expired.</p><p>I put "underwriting" in quotes because I have learned that some insurance companies perform little or no actual underwriting for staffing companies (and even other kinds of companies, particularly in the assigned risk plans) in the sense of expending any effort whatsoever to determine correct classifications at the time the policy is issued. </p><p>Another complicating factor is that many staffing companies find that "voluntary market" Workers Comp insurance is only available through a Large Deductible policy. That introduces additional levels of complexity to determining the ultimate cost of Workers Comp insurance, with complicated side agreements and the significant potential for unexpected additional costs based on the ultimate cost of claims under the policy. Under such policies, getting classification correct is still important, but it is coupled with the very significant possibility of very large additional premium charges becoming due years after a policy has ended. Many staffing companies, in my experience, purchase such policies without fully understanding the potential for significant additional premium charges down the road, simply because they are the only alternative available to Assigned Risk policies (which can have their own drawbacks for a staffing company.)</p><p>Such Large Deductible polices can appear to be attractive at the outset, only to later generate very significant additional premium charges years after the policy has ended, additional premiums that have been calculated according to arcane and complicated formulas that were poorly understood at the time the insurance was calculated. Often, those additional premium charges are based, at least in part, on changes in classifications done at the time of the audit.</p><p>In short, determining correct Workers Comp insurance classifications at the outset is vital for staffing companies, but it is also challenging to do because of the complexity of the rules that govern Workers Comp insurance.</p><p><br /></p><p><br /></p>Ed Prizhttp://www.blogger.com/profile/07231821197333304152noreply@blogger.com4tag:blogger.com,1999:blog-261631044434315236.post-23779173529375874782020-11-02T08:51:00.008-08:002020-11-02T09:00:55.688-08:00A Triple-Whammy Shock Audit For California Contractor<p> So I just finished looking over a Workers Comp Shock Audit for a small California contractor. For those who came in late, a Shock Audit is where the audited premium for a Workers Comp insurance policy is unexpectedly much higher than the original policy premium.</p><p>Turns out, it looks like this is one of those frustrating times when it doesn't look likely I can help reduce this Shock Audit. But it is nonetheless an illustrative case study of how employers, particularly small employers, can get clobbered by one of these Shock Audits.</p><p>In fact, this case illustrates three different ways in which employers, particularly California contractors, can get blindsided about the cost of Workers Compensation insurance. </p><div class="separator" style="clear: both; text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEibCfyZfBOO8NJlL_x7mdFwMM8E-pUyJP-XQpgSi_cEy6wJ9i3JW3_MtNt4FjGtK1AhuL2f5GHYsurQFJePeBtNmeEDe-dJd4LMAQQyLXp2U6146-fui_0NslpGVYvJ5yMajni5JxLLPWTn/s1000/billshock.jpg" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><img border="0" data-original-height="1000" data-original-width="667" height="320" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEibCfyZfBOO8NJlL_x7mdFwMM8E-pUyJP-XQpgSi_cEy6wJ9i3JW3_MtNt4FjGtK1AhuL2f5GHYsurQFJePeBtNmeEDe-dJd4LMAQQyLXp2U6146-fui_0NslpGVYvJ5yMajni5JxLLPWTn/s320/billshock.jpg" /></a></div><br />A triple-whammy of premium traps, you might say.<p></p><p>First off, this employer was puzzled because the policy had been one of those "pay as you go" setups, where premium gets calculated monthly based on actual payrolls. These programs are often touted as providing a solution for the problem of unexpectedly high audit bills--you know, Shock Audits--so this employer was puzzled as to how he could be getting a Shock Audit. So that's the first element of our triple whammy case study--the "pay as you go" fallacy that it solves the problem of Shock Audits.</p><p>The second part of the triple whammy comes in because this Shock Audit is an 'estimated audit". I know, I know, a classic oxymoron like jumbo shrimp, but the COVID-19 pandemic has made these "estimated audits" more common, as field auditors were unable to get out into the field to conduct real audits. So forms were sent out to employers, many of which were themselves shut down or disrupted by the pandemic, and many smaller employers were unsure of how to complete the forms, or were just too disrupted by the pandemic and the associated business crisis to respond.</p><p>An estimated audit isn't really an audit at all--it's the insurance company's educated guess (and often a bit of a worst-case-scenario guess as well) about what the final premium should be. But rest assured, if an estimated audit isn't paid on a timely basis, an insurer will send it out for collection efforts, just like was the case with this small contractor.</p><p>But the final blow of our triple-whammy came thanks to a unique California trap for contractors: Dual Wage Classifications.</p><p>California has a unique bunch of Workers Compensation insurance classification codes that apply for construction work in that state. These classifications are bound pairs, so, for example, this client had two carpentry classes shown on the policy, a cheaper class with rates just over $8.00 (for workers paid $32 per hour or more) and a much more expensive class, with rates over $22 per hour, for workers paid less than $32 per hour.</p><p>Both classes were on the original policy, this "pay as you go" policy, but all the policy's estimated payroll was the cheaper class, with the more expensive class shown with "If Any" for the remuneration.</p><p>So month by month, under the pay as you go system, this employer reported actual payrolls and they got applied under the cheaper class.</p><p>The audit, however, put all of the "estimated audit" payroll into the much more expensive class and rate. Hence, a Shock Audit. It wasn't that payroll was different from what had been reported month by month, it was that all that payroll got switched, on the estimated audit, to a vastly more expensive class.</p><p>This happens because the rules for these Dual Wage Classifications are detailed and a bit onerous and often not well explained when the policy begins. But auditors are trained and motivated to enforce these rules on the audit;</p><p>I've written in more detail about the <a href="https://cutcomp.com/California%20dual%20wage%20classifications.htm" target="_blank">problems with the Dual Wage Classifications before.</a> It can be a nasty problem because many small contractors don't learn about the rule requirements until it's too late to do anything about it.</p><p>I've explained the situation to this particular small contractor, and if he can produce the required time records then I can definitely help reduce this Shock Audit. But if he didn't keep sufficiently detailed time records, as I fear he may not have, there may be no recourse here.</p><p>This one is a very frustrating example of a Shock Audit that exemplified multiple problems with Workers Compensation insurance. Fingers crossed, perhaps I will be able to help these folks, if they kept detailed time records.</p><p><br /></p><p><br /></p>Ed Prizhttp://www.blogger.com/profile/07231821197333304152noreply@blogger.com0tag:blogger.com,1999:blog-261631044434315236.post-48249385845971941982020-10-27T13:23:00.003-07:002020-10-27T13:23:47.882-07:00When Insurance Companies Are Less Than Honest About Overcharges<p> I've had an interesting day today, dealing with an insurance company that overcharged one of our clients in Illinois for Workers Compensation insurance by using the wrong classification (and thus the wrong manual rate) for year after year after year.</p><p>My client reached out to the audit manager at this insurance company, based on information provided by us, and instead of getting apologies for their mistake got vituperation and lies.</p><p>The audit manager told my client that companies like ours "extort" money from insurance companies. You know, because we insist they actually follow the goddamn terms of the policy, which requires insurers to use the correct class and rate even if different than what was originally used. Some extortion.</p><p>Then, the insurance company manager said they had reached out to the Illinois Department of Insurance for guidance. That's because Illinois has a unique statute on the books, one I consulted on when it was drafter way back in 1983. That statute requires insurers to refund any overcharges of Workers Comp premiums due to errors in classification (and other technical errors). In all my past dealings with the Illinois Department of Insurance over the enforcement of this statute, the department has consistently held that the statute means what it says and that insurers must refund any overcharges that have occurred since the statute went into effect in 1984.</p><p>But this insurance company audit manager told our client that the Department told them that they only had to go back three years in refunding overcharges, and even dropped the name of a particular guy at the Illinois Department of Insurance.</p><p>Now, if this client didn't have Advanced Insurance Management as a resource, they might well have accepted this at face value. Too bad it was all falsehoods. As we explained to our client.</p><p>You see, I've worked with that particular guy they named, the guy at the Illinois Department of Insurance, as part of my work getting refunds for clients. I've worked with that particular guy for decades and he has always taken the position that the statute means exactly what it says. And I confirmed that the Illinois Department of Insurance has not revised their position on that.</p><p>Oh, one last thing: that particular guy at the Illinois Department of Insurance, the guy the insurance company said was the basis for their intransigence about those refunds for older policies?</p><p><b>That guy retired back in 2015.</b> So I don't think he gave them any guidance on the department's position about the statute and its requirements. Instead, the insurance company manager probably still had his name on a Rolodex and tossed it out to bolster his bald faced lie.</p><p>What really gripes me is that insurance companies go apoplectic if they think a policyholder has misrepresented material facts that impact coverage or premium. Sometimes they find a friendly prosecutor to bring criminal charges against a policyholder they think was dishonest with them.</p><p>Yet if this particular policyholder didn't have someone knowledgeable to catch these lies, the insurance company would likely have gotten away with it.</p><p>But somehow, in their collective mind, we're the bad guys, for insisting they retroactively fix an obvious mistake that they should have never made in the first place. Grrr.</p><p><br /></p>Ed Prizhttp://www.blogger.com/profile/07231821197333304152noreply@blogger.com0tag:blogger.com,1999:blog-261631044434315236.post-30575137223299824902020-09-11T09:52:00.001-07:002020-09-11T09:52:24.584-07:00Answering A Question From A Premium Auditor<p> I just got an interesting communication from an insurance company premium auditor, regarding a challenging audit she was tasked with performing.</p><p>And this brought to mind something that I thought I should share more widely: I'm always happy to discuss technical issues with insurance premium auditors, underwriters, and agents, on a pro bono basis. </p><p>I get such communications on a semi-regular basis, but I wanted to put this offer out into the world on a more formal basis.</p><p>So keep those cards and letters coming in, folks.</p>Ed Prizhttp://www.blogger.com/profile/07231821197333304152noreply@blogger.com0tag:blogger.com,1999:blog-261631044434315236.post-78220062705039751032020-09-01T13:10:00.002-07:002020-09-01T13:10:44.100-07:00California About to Amend AB 5 For Many Freelancers<p> California's strict test for employment status, known as AB 5, is about to get adjusted to provide some relief for a number of traditionally freelance workers who said their business was harmed by the law, which kicked in early in 2020 and mandated that many of these workers be legally treated as employees.</p><p>The new bill is going to the governor, who is expected to sign it, and it will then go immediately into effect. This new bill will:</p><ul style="background-color: white; border: 0px; color: #1a1a1a; font-family: "Helvetica Neue", Arial, Helvetica, Geneva, sans-serif; font-size: 15px; font-stretch: inherit; font-variant-east-asian: inherit; font-variant-numeric: inherit; line-height: inherit; list-style-image: none; list-style-position: outside; margin: 20px 0px 0.75em 30px; padding: 0px; vertical-align: baseline;"><li style="border: 0px; font: inherit; list-style-position: outside; list-style-type: square; margin: 0px 0px 8px; padding: 0px; vertical-align: baseline;"><span style="border: 0px; font-family: inherit; font-size: inherit; font-stretch: inherit; font-style: inherit; font-variant: inherit; line-height: inherit; margin: 0px; padding: 0px; vertical-align: baseline;"> strike the 35-submission cap for freelance writers and photographers. Under current rules, any California-based freelancer who contributes more than 35 submissions to an outlet per year must be reclassified as an employee.</span></li><li style="border: 0px; font: inherit; list-style-position: outside; list-style-type: square; margin: 0px 0px 8px; padding: 0px; vertical-align: baseline;"><span style="border: 0px; font-family: inherit; font-size: inherit; font-stretch: inherit; font-style: inherit; font-variant: inherit; line-height: inherit; margin: 0px; padding: 0px; vertical-align: baseline;">add translators, appraisers and registered foresters to the "professional services" exemption. This exemption currently covers graphic designers, travel agents and marketers, among others.</span></li><li style="border: 0px; font: inherit; list-style-position: outside; list-style-type: square; margin: 0px 0px 8px; padding: 0px; vertical-align: baseline;"><span style="border: 0px; font-family: inherit; font-size: inherit; font-stretch: inherit; font-style: inherit; font-variant: inherit; line-height: inherit; margin: 0px; padding: 0px; vertical-align: baseline;">allow workers in much of the music industry to continue working as freelancers. The list of exemptions includes recording artists, songwriters, producers, promoters and many others.</span></li></ul><p style="background-color: white; border: 0px; color: #1a1a1a; font-family: "Helvetica Neue", Arial, Helvetica, Geneva, sans-serif; font-size: 15px; font-stretch: normal; font-variant-east-asian: normal; font-variant-numeric: normal; line-height: 22px; margin: 0px; padding: 10px 0px; vertical-align: baseline;">The new bill also adds exemptions for:</p><ul style="background-color: white; color: #333333; font-family: Georgia, "Times New Roman", Times, serif; font-size: 16px;"><li style="margin-left: 15px;">youth sports coaches,</li><li style="margin-left: 15px;">specialized performers,</li><li style="margin-left: 15px;">home inspectors,</li><li style="margin-left: 15px;">insurance industry field service contractors,</li><li style="margin-left: 15px;">appraisers,</li><li style="margin-left: 15px;">underwriting inspectors,</li><li style="margin-left: 15px;">premium auditors,</li><li style="margin-left: 15px;">risk management, or loss control specialists</li><li style="margin-left: 15px;">sports competition judges, umpires, and referees,</li><li style="margin-left: 15px;">graphic design,</li><li style="margin-left: 15px;">web design,</li><li style="margin-left: 15px;">tutoring,</li><li style="margin-left: 15px;">consulting,</li><li style="margin-left: 15px;">caddying,</li><li style="margin-left: 15px;">wedding planning & event vending,</li><li style="margin-left: 15px;">yard cleanup,</li><li style="margin-left: 15px;">captioning,</li><li style="margin-left: 15px;">interpreting and translating services.</li></ul>Ed Prizhttp://www.blogger.com/profile/07231821197333304152noreply@blogger.com0tag:blogger.com,1999:blog-261631044434315236.post-14796597898399373782020-08-25T10:55:00.001-07:002020-08-25T10:56:49.832-07:00Workers Comp and COVID-19 in Illinois-an Overdue Update<p> After certain business groups successfully got the courts to overturn the governor's emergency order, the Illinois legislature turned that emergency order into legislation, legislation that was <a href="https://www.natlawreview.com/article/take-two-illinois-enacts-law-providing-presumption-workers-compensation-coverage">signed by the governor on June 10, 2020.</a></p><p>So once again, at least until December 31, 2020, workers in a wide variety of employments have a rebuttable presumption that COVID-19 is an Occupational Disease and is covered by the Workers Compensation Act.</p><p>The list of <a href="https://www2.illinois.gov/Pages/Executive-Orders/ExecutiveOrder2020-10.aspx">covered work </a>goes well beyond first responders and health care workers; it covers a great many types of businesses and essentially extends Workers Comp coverage for COVID-19 for workers in those businesses who must have contact with the public or groups of workers greater than 15.</p><p>The list of covered employments includes: </p><p>grocery and pharmacy; food, beverage and cannabis production; charitable and social service organizations; gas stations and businesses needed for transportation; financial institutions; hardware and supply stores; critical trades; mail, post, shipping, logistics, delivery and pick-up services; educational institutions; laundry services; restaurants for consumption off-premises; essential business and work-from-home suppliers; home-based care and services; residential facilities and shelters; professional services; day-care centers for children of essential workers; manufacture, distribution and supply chain for critical products and industries; critical labor union functions; hotels and motels; and funeral services.</p><p><br /></p>Ed Prizhttp://www.blogger.com/profile/07231821197333304152noreply@blogger.com0tag:blogger.com,1999:blog-261631044434315236.post-76375232168552495632020-06-17T13:33:00.001-07:002020-06-17T13:39:00.255-07:00Minority-Owned Businesses and Illinois Workers Comp Costs<span style="font-size: large;">My company is in the process of trying to initiate some outreach with minority-owned businesses in Illinois, as I've come to suspect that such minority-owned businesses might be disproportionately impacted by the kinds of overcharges we routinely find when we review Workers Compensation insurance premium charges for employers. I suspect certain features of the Workers Comp insurance system might be causing even greater harm for minority businesses than they do for employers in general.</span><br />
<span style="font-size: large;"><br /></span>
<br />
<div style="margin-bottom: .0001pt; margin: 0in; text-align: justify;">
<span style="font-family: inherit; font-size: large;">One of those
features of the Illinois Workers Compensation insurance system that I fear may disproportionately
harm minority businesses is the Assigned Risk Plan. Since Illinois mandates
most businesses carry Workers Compensation insurance, the Assigned Risk Plan
was created to make sure that businesses can obtain Workers Compensation
insurance even when insurance companies, operating in the so-called “voluntary
market”, are unwilling to offer this coverage. </span><span style="font-family: "calibri" , sans-serif;"><o:p></o:p></span></div>
<div style="margin-bottom: .0001pt; margin: 0in; text-align: justify;">
<span style="font-family: inherit;"><br /></span></div>
<div style="margin-bottom: .0001pt; margin: 0in; text-align: justify;">
<span style="font-family: inherit;"><br /></span></div>
<div style="margin-bottom: .0001pt; margin: 0in; text-align: justify;">
<span style="font-family: inherit; font-size: large;">The Assigned
Risk Plan is sometimes called an “insurer of last resort” because the insurers
taking part in the plan cannot reject an application for coverage (save only if
the employer has failed to pay a prior premium bill for a policy from the
Plan.)<o:p></o:p></span></div>
<div style="margin-bottom: .0001pt; margin: 0in; text-align: justify;">
<br /></div>
<div style="margin-bottom: .0001pt; margin: 0in; text-align: justify;">
<span style="font-family: inherit; font-size: large;">But the
downside of the Assigned Risk Plan is that it is much, much more expensive than
identical coverage offered through the voluntary market. By means of a
combination of higher rates and the loss of certain discounts, premium charges
for an Assigned Risk policy can often be close to double what the premiums
would be for an identical voluntary market policy.<o:p></o:p></span></div>
<div style="margin-bottom: .0001pt; margin: 0in; text-align: justify;">
<br /></div>
<div style="margin-bottom: .0001pt; margin: 0in; text-align: justify;">
<span style="font-family: inherit; font-size: large;">The only
requirement for acceptance into the Assigned Risk plan is an insurance agent
who attests that a couple of different voluntary market carriers declined to cover a
business. This is a fairly low bar, and for a variety of reasons I suspect
minority-owned businesses might get shunted to Assigned Risk policies
disproportionately, even though voluntary market coverage might, with just a
bit more marketing effort, be available. </span><span style="font-family: inherit; font-size: large;"> </span><br />
<span style="font-family: inherit; font-size: large;"><br /></span>
<span style="font-family: inherit; font-size: large;">Workers
Compensation insurance in Illinois is sold by insurance agents, of course. And not all
insurance agents and agencies have the same access to desirable Workers
Compensation insurance companies. </span></div>
<div style="margin-bottom: .0001pt; margin: 0in; text-align: justify;">
<span style="font-family: inherit; font-size: large;"><br /></span></div>
<div style="margin-bottom: .0001pt; margin: 0in; text-align: justify;">
<span style="font-family: inherit; font-size: large;">So if a minority-owned business approaches a
small insurance agency with limited access to voluntary market Workers Comp
insurers, I fear that those agents may often place these businesses into the Assigned
Risk Plan-- not because of any inherent problems with the business but because
small insurance agencies typically have less access to a variety of voluntary
market insurers.</span><br />
<span style="font-family: inherit; font-size: large;"><br />This process
would often not be particularly transparent to the business owners, who may have limited
understanding of the fine points of the insurance system, particularly in
regards Workers Compensation insurance. In my experience, even very experienced
business managers have little understanding of the hidden pitfalls of the
insurance system.</span></div>
<div style="margin-bottom: .0001pt; margin: 0in; text-align: justify;">
<span style="font-family: inherit; font-size: large;"><br /></span></div>
<div style="margin-bottom: .0001pt; margin: 0in; text-align: justify;">
<span style="font-family: inherit; font-size: large;">But it's not just the inherent higher cost of Assigned Risk policies.</span></div>
<div style="margin-bottom: .0001pt; margin: 0in; text-align: justify;">
<span style="font-family: inherit; font-size: large;"><br /></span></div>
<div style="margin-bottom: .0001pt; margin: 0in; text-align: justify;">
<span style="font-family: inherit; font-size: large;">My company
specializes in finding and correcting technical errors by insurance companies,
errors that overcharge the business that purchased the insurance. Such overcharges
are, unfortunately, far from uncommon. I’ve been doing this kind of work since
the mid-1980s, and I started my company in 1987 to specialize in it. <o:p></o:p></span></div>
<div style="margin-bottom: .0001pt; margin: 0in; text-align: justify;">
<br /></div>
<div style="margin-bottom: .0001pt; margin: 0in; text-align: justify;">
<span style="font-family: inherit; font-size: large;">These kinds
of technical errors, when they happen in Assigned Risk policies, <b><i>get
amplified</i></b> by the higher rates and lack of discounts that are the norm
in the Assigned Risk Plan. So minority
businesses may well be getting doubly harmed—first, by being disproportionately
placed in the more expensive Assigned Risk Plan, and second, by the increased
impact of technical errors within the more expensive Assigned Risk policies.</span><span style="font-family: "calibri" , sans-serif;"><o:p></o:p></span></div>
<br />
<br />
<span style="font-family: inherit; font-size: large;"><br /></span>
<span style="font-family: inherit; font-size: large;">Well, anyway, that's my concern, at any rate. And like I said, we're in the process of initiating some outreach to minority business owners, to see if we can help them catch and correct the overcharges that I've spent the past few decades finding and correcting for employers all across the U.S.</span><br />
<span style="font-family: inherit; font-size: large;"><br /></span>
<span style="font-family: inherit; font-size: large;">I'll keep you posted regarding what we find. My gut feeling is that there is a lot to find, and a lot of overcharges to recover.</span>Ed Prizhttp://www.blogger.com/profile/07231821197333304152noreply@blogger.com0tag:blogger.com,1999:blog-261631044434315236.post-58433584676381987642020-05-19T14:03:00.000-07:002020-05-19T14:33:23.414-07:00The Great California Workers Comp Insurance Dual Wage Classification ScamI've just finished reviewing my second California Shock Audit today that was caused by the same outrageous insurance industry scam, one that is unique to California and that typically ambushes small contractors: The Dual Wage Classification Scam.<br />
<br />
Here's how it worked for one of these contractors, a small plumbing contractor in Los Angeles. When the policy was written, all the non-clerical payroll was placed into Code 5187, the plumbing classification to be used when workers are paid $26.00 per hour or more. This class had a rate of 5.21 per hundred dollars of payroll.<br />
<br />
Also on the policy was Class 5183, for workers paid less than $26.00 per hour. That class had a rate of $10.41 per hundred dollars of payroll. But that class had no payroll shown, just "IF ANY", so since there was zero payroll in that class it <b>generated zero premium</b>--at least, <b>zero initial estimated premium,</b> on the original<b> policy</b> that was sold to this plumber.<br />
<br />
But of course, the initial estimated premium on the policy isn't the actual cost for the insurance. <b>After the policy ends</b>, the insurer normally wants to determine what the actual payroll was for the policy period--after all, premiums for Workers Comp insurance are based on payroll.<br />
<br />
But audits often do more than just adjust payroll. In this case, the audit did a classic Shock Audit switcheroo--the audit, unlike the original policy, placed all non-clerical payroll into the $10.41 classification, and none into the $5.21 class.<br />
<br />
<b>Presto, change-o--this plumber's<span style="color: red;"> insurance rate just doubled</span>, after the policy was ended and it was too late to do anything about it.</b><br />
<b><br /></b>
<b>And all perfectly according to Hoyle, or rather, according to the self-serving rules the insurance industry has created.</b><br />
<b><br /></b>
<b>The insurance industry rules require very specific timekeeping records be kept, and if they are not kept exactly as required then the payroll shifts to the more expensive one and it doesn't matter a bit how the policy was set up when purchased.</b><br />
<b><br /></b>
<b>Now, with my small plumber, this was not explained when he purchased his policy.<span style="color: red;"> It doesn't matter</span>.</b><br />
<b><br /></b>
<b>The easy to understand rules that were not explained are:</b><br />
<b><br /></b>
<span style="background-color: white; color: #222222; font-family: "arial" , "helvetica" , sans-serif; font-size: x-small;"> 1. Original time cards or time book entries for each employee. Original records must include the operations performed, the total hours worked each day and the times the employee started and ended each work period throughout the workday. At job locations where all of the employer’s operations cease for a uniform unpaid meal period, recording the start and stop times of the uniform break period is not required. 2. A valid collective bargaining agreement that shows the regular hourly wage rate by job classification of worker. If using a collective bargaining agreement, the records must include an employee roster by job classification that permits the reconciliation of individual employees to the job classifications set forth in the collective bargaining agreement. </span><br />
<span style="background-color: white; color: #222222; font-family: "arial" , "helvetica" , sans-serif; font-size: x-small;"><br /></span>
This clever arrangement guarantees that a fair number of small employers will think they are buying a policy with a five dollar rate, only to learn after the policy ends that they really owe based on a ten dollar rate.<br />
<br />
Sure wish I could run my business like that.<br />
<br />
And unless this insured kept those kinds of records, there's nothing at all he can do about this legal bait and switch operation.<br />
<br />
Fortunately, it looks like there might be other errors in how these premium charges were computed, errors that might be more amenable to correction.<br />
<br />
But it rankles me that the existing rules allow this kind of classification hocus-pocus to happen. And it happens to a lot to small contractors in California, and they typically have to just suck it up and pay.<br />
<br />Ed Prizhttp://www.blogger.com/profile/07231821197333304152noreply@blogger.com0