Why Every Business Needs Someone Like Me

That sure seems like an egotistical headline for a blog post, but I hope readers will bear with me and let me explain. I'm not saying every business needs me, exactly (although that would be a nice thing, from my point of view) but rather that they need someone like me.  And this has to do with the rather unique, emerging specialty that I've been working in for the past thirty years or so. That specialty is the independent consultation and review of Workers Compensation premium charges.

Don't get me wrong--we help a lot of companies, big and small. So do our competitors, scattered around the country. But all of our combined clients constitute just a tiny, tiny fraction of all the businesses that buy Workers Compensation insurance. So despite all our best efforts at marketing and promotion, most companies don't really know our industry exists.

Yet I am firmly convinced that most, if not all, businesses that purchase Workers Compensation insurance would benefit from using the services of someone like me.

Consider this analogy: almost every business of much size hires an independent professional accountant to do their bookkeeping and taxes.  You just don't want to trust the IRS to figure your taxes, even though you could. Most businesses find it prudent to hire an independent professional because tax rules are complicated and they figure (correctly, I am sure) that the cost of such an independent professional is worth the expense to avoid paying unnecessary taxes or penalties.

Well guess what? The rules governing the computation of Workers Compensation insurance premiums are complex as well, and perhaps less well understood generally than the tax laws. Most of the people who know these rules well work for the insurance companies--and their training and management tend to focus on finding mistakes that serve to reduce premiums, and not so much on catching any mistakes that increase premium charges.

Ah, some folks say, but that's where our broker comes in--that's why we pay him those commissions. Our broker/agent takes care of that for us.

That sound you now hear is me clearing my throat dramatically. Because in every single case where we've found and fixed premium overcharges, the client had an agent/broker. And usually a good one. It's not like we only find overcharges for clients who have sloppy agents.

The problem is that agents/brokers aren't usually well-trained in the complex rules that govern Workers Comp premium computation. They know the basics, sure--but they're not specialists. And even when they do think they've spotted a problem, the insurance companies take anything they say in this regard with a huge grain of salt. The insurers tend to dismiss a lot of the input of agents/brokers in this regard because the insurance companies know that their own underwriters and auditors have a lot more training and experience in these technical areas. And they also expect that an agent will take the policyholder's side because the agent is trying to keep in good graces with his customer.

The other handicap agents and brokers have is that they can't be seen by the insurers as being too antagonistic to the insurance companies interests, because that agent may well need that same insurance company to give him a good quote on another account next week, or next month. So the agent/broker can't step on too many toes at the insurance company.

That's part of the reason why my company gets hired by insurance agents to help their clients sometimes--they understand that we can help clients when they can't.

The rules governing Workers Compensation insurance premium are complicated, as I said earlier, and can involve the interplay of multiple bureaucracies. Often, to correct an overcharge for a client, we end up working not just with the insurance company but also the appropriate rating bureau and maybe even state insurance regulators. Because these separate operators don't always work together as effectively as one might wish.

To correct an error in an experience modifier, for instance, often requires us to work with the rating bureau, a past insurance company, and possibly a different insurance company that writes the current policy. Sometimes, we also have to work with state insurance regulators, to prod recalcitrant or reluctant insurers to file the corrected reports on a timely basis.

Because we work with these fine details of the system every day, we know how things are supposed to work--and where they often fall between the cracks. It's a specialized field within the insurance industry, one that is still poorly understood by many.

But it is in the interests of businesses to understand that this specialized service exists, and how they could benefit from it.

As I often like to say, if your business doesn't trust the IRS to figure your taxes, why in the world would you trust your insurance company to figure your Workers Comp premiums? As a wise man once suggested, "Trust, but verify."