When closing out a workers' comp year as an employer, agent or adjuster, three things may make one think otherwise. Let us look at three things that make workers' comp close out on a calendar-year basis.

James Moore

I came up with the idea for this article when I heard from an employer that it was closing out its tax, insurance and other parts of the budget on Dec. 31.

Policies that match calendar year

Many articles appear on this website concerning a policy that renews from Dec. 15 to Jan. 5 of each year. Agents and brokers are overloaded with Jan. 1 renewals. Why?  Think of Holiday shopping Dec. 22-24. The malls, stores and online retailers are in such a rush that you may find it less than desirable due to the timing.

Agents are overloaded with renewals during this time. Many business owners begin their business on Jan. 1. If you do, moving your renewal date may be a great option to later in January. Closing out a workers' comp year on Jan. 1 may cost your company in the long run.

Policy year vs. experience-mod year

Many articles reference the experience-mod year. A quick note: The rating bureaus such as NCCI, WCIRB and other agencies generate your experience mod.

No, it does not run equal to your policy year. Closing out a workers' comp year on your experience mod comes six months later.

Yes, the claims that occurred during your policy year provide your insurance carrier with a development period (six months) for the claims staff to adjust your reserves up or down, close the file or leave the reserves as they are on your claims loss run.  Many articles on this website cover this well. See this search listing for some of the most important ones.

Premium audit

The workers' comp premium audit closes out your policy year. An employer cannot close out its policy year without it.

You are looking at a period of up to 90 days for the premium audit. It's the final process in closing out a workers' comp policy year, depending on your insurance carrier’s timetable.

Most carriers are now performing hybrid premium audits where the employer provides the requested info by scanning the documents and uploading them to the carrier. The 90 days may be shortened by this process.

This blog post is provided by James Moore, AIC, MBA, ChFC, ARM, and is republished with permission from J&L Risk Management Consultants. Visit the full website at www.cutcompcosts.com.