We Need A Coronavirus Lifeline for Business on Workers Comp Audits

We're in the midst of an unprecedented pandemic emergency. Entire categories of business have been abruptly shut down by authorities in the desperate attempt to curtail the growth of this dangerous infection. Workers in the restaurant and hospitality industries have just been tossed to the curb en masse. And a great many other businesses are trying to survive in a world where no one has any damn idea what their cash flow will be next month--or next week.

Pennsylvania's governor has just ordered the closure of all "non-essential" businesses. There are serious plans to suspend evictions and foreclosures. Courts all over the country are closed for business.

But the insurance industry shows no sign of relenting on Workers Comp Shock Audits. If anything, the industry may be intensifying its efforts.

I got an email from a client I helped last year. Back in 2019 I got an insurance company to correct their excessive audit for this client. Now, a year later, the apparently panicked insurer has informed them they are now retroactively reversing the correction, and if they don't pay up promptly they will file suit.

Well, I'm not sure what court these geniuses will file in at the moment, but beyond that, I'm starting to get other phone calls and emails that make me realize the insurance industry has not the slightest intention of giving employers any slack in billing for additional premium generated by Workers Comp audits.

So businesses that are abruptly being shut down by government order are still facing financial ruin over their past Workers Comp insurance. And businesses that, while still in business but may be struggling to cope with a workforce suddenly displaced to working from their kitchen tables, will still be vulnerable to the often error-riddled audit charges for their past Workers Compensation insurance coverage--coverage from, you know, back before we were all living in a real world horror movie.

What businesses need right now is a moratorium on insurance companies billing additional premium charges for audits of past policies.

Without that relief, the insurance industry's habit of issuing Shock Audits for Workers Comp insurance (many of which are improperly inflated by technical errors) will be the final nail in the coffin for many of these operations.

Sure, it looks like this self-serving practice by the insurance industry looks likely to generate lots of additional work for us here at A.I.M. But we were plenty busy before this crisis.

I used to joke that the insurance industry must be worried about the Priz boys not having enough work, so they set out to traumatize employers with Shock Audits. Now that joke isn't funny any more.

It's not like insurance companies are likely to be able to collect a lot of the additional premiums they bill out now. You can't get blood from a stone, and all that. But apparently that won't stop them from trying. So once the courts open up again for business, there may be a lot of lawsuits filed by insurers over uncollected Workers Comp premiums.

And since a fair number of those premiums will likely be improperly inflated by technical errors regarding classifications, payroll audits, experience modifiers, and other underwriting and auditing errors. we're likely to be busier than ever.

But it really shouldn't be that way.