California Construction Company Blues

 

Time Flies

 

Workers Comp & Me

 

Update On My Last Post

 I may have been premature in my last post about a small Georgia contractor being crushed by a Workers Comp Shock Audit. We've figured out how to reduce this audit by just enough to keep them in business, when combined with our negotiating on their behalf to work out a payment plan for the remainder of the audit.

Mind you, it's still quite a large bill--hence the need to work out a payment plan. But the client feels that, with the reductions we can produce, the remaining audit bill can be handled, if we can work out a reasonable payment plan.

My son and partner here, Scott Priz, who is also a talented and resourceful attorney, is going to handle correcting the audit and negotiating a payment plan. He's extremely good at both. So it looks like we'll be able to help this Georgia small business stay in business, albeit with a painful bill to still handle.

But it's better than what I initially feared would be the case.

Another Small Business Destroyed by Workers Comp Insurance

 I just had to write a very frustrating email to a potential client, a small construction company in Georgia. They bought a Workers Comp insurance policy for $1,500 and now have an audit bill for $136,000, and I don't see any way to help them--outside of a courtroom, at least, I'm not an attorney but I do a lot of expert witness work in litigation over Workers Comp premiums. But fighting these kinds of audits is expensive, with no guarantee of success.

The trap this small business fell into is one I see often. The people selling the insurance sell them what is known as a Minimum Premium policy, without explaining that the ultimate premium could well be much, much more. Typically, the insurance agent doesn't do a very good job explaining how the insurance company typically charges premium for uninsured independent contractors, the same as for regular W-2 type workers.

And the shitty thing is, insurance agents typically aren't required to explain that kind of thing. Because insurance agents aren't held to the kind of professional standards that attorneys or accountants are. Insurance agents generally only to have to be an honest order taker. If they get you the insurance you asked for, and don't steal your money, they've typically satisfied their legal requirement. It's only if they voluntarily act as an insurance advisor that an agent can create for himself or herself a higher duty to actually offer accurate and reliable advice.

It's actually a common practice for insurance agents to sell these Minimum Premium policies to small contractors and never warn them about the possible ruinous consequence of a huge premium audit after the policy expires. I get calls and emails all the time about this issue, Sometimes, I can help reduce the bill. This time, it doesn't look like I can.

Insurance regulators and insurance companies often claim that Workers Comp insurance is the most regulated line of insurance, and that's technically true. Yet for something supposedly so regulated, insurance companies sure as hell get away with destroying a lot of small businesses, when Shock Audits for Workers Comp arrive in the mail.

This problem could be fixed, if so much money wasn't made with the existing shitty system.

For instance, insurance agents could be held liable for providing genuine advice about these kinds of things, by statute, instead of being left with no more liability than a kid working at McDonald's.

Or limits could be placed on the ability of insurance companies to issue audit bills that are far, far in excess of what the original policy premium was.

Or states could establish requirements for clear and understandable warnings to be given to businesses about this potential audit landmine, at the time they purchase Workers Comp insurance.

Or states could create administrative systems with authority to provide clear guidance to employers about when an independent contractor is subject to the Workers Comp Act, and when they are not, an administrative system that doesn't require fighting an expensive lawsuit.

But at the moment, small companies, especially small construction companies, continue to exist under this existential threat of obliteration by their insurance company, over insurance coverage they are forced to purchase. No other industry I can think of could operate in such a fashion, selling a product initially priced like a bicycle but later sending a bill for a goddamn Ferrari.

Keep Those Cards and Letters Coming In, Folks

 Just about every business day, we get a phone call or email from some employer somewhere in the U.S. who is facing what we call a "Shock Audit" for Workers Comp insurance. Today's call is from a California construction company that is on the receiving end of a Shock Audit for $100,000 of additional premium.

As I told this worried gentleman, I can't promise we can help his particular situation, but I'll be glad to take a look at it to see if we can. I mean, we can help an awful lot of the people who reach out to us, but not all of them. But I'm always happy to take a look at the audit documents to see what might be done for a particular employer.

Another thing I say a lot is "in a perfect world, I should have to be doing something else for a living." I mean, if the Workers Comp insurance system ran fairly and smoothly there wouldn't be so many problematic premium audits--and certainly not so many of these Shock Audits that are excessive and plain old wrong. 

Don't get me wrong--I'm happy to be in demand. And thanks to the wonderful reach of the internet, employers all over the country can find us and seek help. That wasn't the case when I started Advanced Insurance Management, back in 1987. Of course, nowadays it isn't just me doing the helping.

My son, Scott Priz, joined the firm back in 2003, after graduating from the University of Chicago. And to my delight, he took to this unusual line of work with alacrity and enthusiasm and has helped more than his share of our clients over the ensuing years. And then, a few years back, he took a further step--he got his law degree, bringing a whole new level of expertise to the mix. Scott brings a rather unique combination of expertise to bear for clients--more than twenty years of experience as a consultant on Workers Comp audits and premiums, along with admission to the bar. It's a powerful and rare combination.

There's another thing I say a lot, as well. "Insurance may be the middle name of my company, but we don't sell insurance. We fix it." Because we don't sell insurance. We specialize in fixing insurance industry errors in Workers Comp classifications, audits, experience modifiers, and premium charges. But we don't compete with insurance agents and brokers. We're genuinely independent consultants who specialize in a unique service.

Some folks in the insurance industry get rubbed the wrong way when I talk like that, I know. When I gave a presentation at a local meeting of premium auditors a while back, I could sense a fair degree of skepticism from the audience--even some hostility, I think. But facts are facts. The majority of the people who reach out to me have been overcharged on their audits. And that's proven by the fact that, in most of those cases, I'm able to get those audits reduced significantly.

Remember, no one reduces an audit bill just because I ask nicely. No insurance company changes classifications or payrolls or premiums just because they like me. A lot of them aren't exactly in my fan club, I figure. They correct those audits and reduce the charges because I identify and document errors in how the premiums were calculated. And under the rules, insurance companies have an obligation to calculate those premiums correctly. 

It's just that a lot of these Shock Audits haven't really been calculated correctly. And that's where I come in. I know how to dispute premium audit charges, and dispute them successfully. 

So anyway, keep those cards and letters coming in, folks. Or in this day and age, emails and texts. I'm always glad to take a look.

All About AIM

 I just got this in the mail today from the Better Business Bureau, signifying that Advanced Insurance Management LLC has been a member in good standing since 2005--so going on 20 years now.

In all these years, we have also been "Complaint Free" per the BBB.

The reason I've felt that BBB membership is important to our little company is that we provide unique business services, services that are something of a new concept for most of our prospective clients. So I've always felt that BBB membership is one important benchmark a prospective client can use to evaluate us and our unique services.

We don't sell insurance, after all. In spite of having "Insurance" as our company's middle name, we're not insurance agents or brokers, and we're not an insurance company. Instead, we help businesses to find and correct technical errors in Workers Compensation insurance premiums, errors that have caused significant premium overcharges.

So we check over Workers Comp audits, classifications, experience modifiers, and other technical rating factors that directly impact the premiums that employers have to pay for their Workers Compensation insurance. And when we find errors that have caused our clients to have overpaid, we then work to get that money back for them.

I often like to say, in a perfect world, I should have to do something else for a living. But we don't live in a perfect world, and overcharges by insurance companies for Workers Comp insurance remain a persistent and ongoing problem for business owners and managers.

And we're still here to help. I started this business in 1987, and I'm not planning on going anywhere. Of course, nowadays, my son Scott is also carrying on the family tradition, so even when I eventually have to hang up my spurs (not for a long time, hopefully) Advanced Insurance Management will still be providing our unique assistance to employers.