|
|
|
|
|
|
In their never-ending quest to improve financial performance in workers compensation, insurers have discovered a new tactic - premium fraud auditors. Billed as an antifraud measure, these self styled experts seek to identify policyholders that have engaged in unlawful premium reducing techniques, such as:
1) Concealing payrolls What the insurance industry has not done is to accept responsibility
for their own failings. We
do not condone fraud by employers and believe that those who
deliberately deceive for the purpose of lowering premium should be
held accountable. But the same standards that apply to policyholders
should also apply to insurance companies. Insurers are quick to transfer responsibility for their own errors and
the errors of their agents to policyholders. Our own experience confirms that the vast majority of
mistakes in workers compensation premium are the result of insurance
company omissions, not deliberate deceptions by policyholders. It is disingenuous to assign blame to employers when many insurers are themselves guilty of improperly changing classifications, using incorrect experience modifiers, overlooking required premium credits, keeping claims open long after necessary, withholding information from policyholders that could lower premium, estimating payrolls, and neglecting to file the mandatory reports that are required to calculate the experience modification. The premium fraud mania that is now sweeping the workers compensation
business is being used as a shield to conceal the insurance
industry’s own failings. By relying on dubious assertions of fraud and ignoring long established premium rules that are mandated by their regulators, the industry will inevitably raise the question in many minds: Exactly who is the fraudster, the insured or the insurer?
|
Premium fraud auditors six step formula to riches
1)
Examine
underwriting files. If significant errors are discovered in either the
application for insurance, payroll reports, or classifications, then label it a
fraud.
2) Narrow the focus to industries that offer the most complex pricing schemes. These are industries that a) require many class codes, b) employ classifications with precise or restricted interpretations or, c) use classifications with extremely high rates.
3)
File a complaint with authorities. Request a criminal
investigation.
4) Demand access to the employer’s records. Revise previous audits. The new audits often result in six or seven figure additional premiums. They frequently overlook many of the industry’s long-established rules. The audits have one goal: Maximize premium. Accuracy takes a back seat.
5) Commence a lawsuit for Additional Premiums earned on the new audits.
6) Intimidate the policyholder. Use the threat of the criminal probe to extract a lucrative settlement.