Projects

KMRD’s Audit Process Saves $98,000

A social services organization faced an increase in premiums, despite their improved loss experience. KMRD’s expertise, audit process and persistence created a $98,000 price swing. This allowed our client to recapture their overpayment.

The Issue

A social services organization that serves under privileged and troubled youth received the results of their workers’ compensation audit from their previous broker/carrier.  The audit obligated our client to pay an additional premium of $26,000 and the carrier was calling daily for collection.  As part of our standard service, our team reviewed it for accuracy and determined the following:

• The original policy was issued to include a 10% Scheduled Credit and the previous year’s experience mod of 2.204.
• However, the audit utilized a Scheduled DEBIT of 10%, and the final experience mod of 1.250.  The carrier shifted the rating structure by 20% to offset the impact of the reduction in premium as a result of improved loss results.  This change did not seem on the surface to be fair.  Shouldn’t the customer get the benefit of improved loss experience in the form of reduced premiums?

This change in the rating structure resulted in an additional premium request. Had the change not occurred, the carrier would have owed the client a return premium of $72,000, a $98,000 swing.  Every dollar was important to keep the client’s mission alive.

Our Response

KMRD’s initial letter to the carrier identifying what seemed to be a simple clerical mistake did not result in a favorable response.  Rolling up our selves, we combed through our client’s files to determine why this adjustment was made. The results were both revealing and disturbing:

• No mention of a pending adjustment in any of the proposal documents.
• A letter from their broker forwarding an endorsement making the rating change mid-term.  The letter provided no explanation on the financial impact of the change.
• A copy of an “off the shelf” memo conforming coverage was bound from the carrier that included a standard stipulation that the policy’s premium will be adjusted when the final variables were promulgated.  This language was favorable to our argument that the adjustment was not appropriate.

The Results

KMRD presented our findings to the carrier as a “consultant” on behalf of our client.  The paragraph on page 3 of the “off the shelf” memo was not disputable.  This carrier collections department stopped calling our client and KMRD proceeded to “follow up regularly for a check from the carrier” in the amount of $72,645.  The check arrived and assisted in their ability to enhance their mission.  This win occurred over Thanksgiving and was rewarding on many levels.

A Word From Our Client

“I would like to thank you and your team for the work that was done which allowed us to recapture the overpayment.  Your diligence and follow through was the sole reason that we were able to appeal the audit and accept the decision that resulted in our favor”.

With KMRD’s involvement costs were reduced. That’s the KMRD difference.