IRMI Update—Issue #174
An E-mail Newsletter for Risk and Insurance Professionals
ISSN: 1530-7948
December 12, 2007
In This Issue
Colleague,
As the end of the year approaches, agents, brokers, and adjusters in many
states need to obtain some additional continuing education credit to keep their
licenses. If you are one of these, please consider taking an IRMI continuing
education course. Here are some reasons why you should try our courses:
- They will give you knowledge you can use to provide superior service
to your clients.
- If you choose the CRIS program, you can obtain a certification that
will enhance your credibility with contractor clients and prospects (and
underwriters).
- They are ridiculously inexpensive for such high-quality offerings.
- You'll select from a broad spectrum of personal lines and commercial
lines course topics.
- You can comply with your state CE requirements for ethics, flood, or
legal courses.
- You can take them at any time of the day on any computer connected to
the Internet.
There are other online CE courses on the Internet. However, I promise you
will gain more valuable knowledge from IRMI courses than from the competition.
If you are going to spend the time, why not seek knowledge that will enhance
your job performance rather than simply meeting the basic state requirement?
Learn more about our general insurance and construction risk management continuing education programs.
Thank you for subscribing to IRMI Update. Have a great day.
Jack
Jack P. Gibson, CPCU, CRIS, ARM
President
IRMI
Before, During, and After the Premium Audit—Before
your premium audit, be sure your exposures are accurate:
- Notify your broker when changes occur that affect your workers compensation
(number of employees, job classifications, payroll, states of operation)
or commercial general liability (payroll, sales, area or other basis for
premiums) policies. These changes could affect not only the cost of your
insurance, but also the insurer's obligation to cover a claim.
- Understand what "remuneration" does not include, such as: expense reimbursement
to employees, contributions to benefit plans, work uniform allowances, and
perks such as company-provided vehicles. Make sure your payroll records
identify the officers, so the auditor can cap their compensation.
- Track overtime pay separately—both by individual employee and for all
employees in a classification, so overtime is counted as straight time for
workers compensation.
- Verify that your contractors have their own insurance in force. If you
don't, their payroll becomes your payroll. If your contractors can't provide
certificates of insurance, charge back to them the portion of your insurance
cost that is based on their payroll. Follow the IRS criteria to make sure
your contractors are "independent."
- Monitor your claim reserves so your debit or credit modification reflects
current reserves.
- Once notified of an audit, conduct a "dry run" to compare your projected
results with the actual audit.
During the premium audit:
- Have available your federal and state tax reports, ledgers, checkbooks,
contracts, 1099s or other documents the auditor specifies.
- If conducted at your site, stay in the room during the audit to answer
questions.
- Make sure rates and classifications on the audit match the current policies.
- Make sure officers are identified.
- Ensure the "experience modification factor" used on the workers compensation
audit, and any experience calculations used for the commercial general liability
policy, are current. If you are not sure the auditor's worksheets reflect
your actual claims experience, have the auditor check the claim files.
- If there's an error on the experience modification factor, make sure
the insurer notifies the National Council on Compensation Insurance to make
the correction.
- Get copies of the draft worksheets from the auditor.
After the premium audit:
- Compare draft worksheets with the final audit. Check for simple mistakes
like transposition errors.
- Make sure overtime was not charged inappropriately.
- Ensure no contractors were classified as employees if you had certificates
for them and they satisfied the IRS "independent contractor" criteria.
- Make certain former employees are not shown on the payroll unless they
actually worked during those policy periods.
- If an error in the experience modification factor was discovered, make
sure the insurer corrects it.
- Keep in place all the controls described in the first part of this article.
By: William Henry, Vice President
The CIMA Companies, Inc.
Alexandria, VA
bhenry@cimaworld.com
Suggest a Risk Tip. Send us a practical tip (less than 300 words) for identifying and managing risks,
buying insurance, managing claims, or filling gaps in insurance coverages. Submit your
risk tips. We'll
acknowledge your contribution as we did for William.
The November issue of
The Risk Report,
Layered Property Insurance by William K. Austin, discusses some of the issues
common to external layered property insurance programs. While a layered property
insurance program is significantly more complex than purchasing a single policy
from one insurer, it can be an effective way to obtain the broadest coverage
and lowest cost.
For IRMI
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Sage subscribers
There are now nearly 1,000 risk management and insurance articles on IRMI.com.
Below you'll find summaries of some recent additions with links to the articles.
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