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Posts|July 27, 2020

Coronavirus – How to Manage Premiums

By Preston Cavignac
Principal CPCU, CIC, CRM

There has been no shortage of content summarizing different acts/orders from state and local governments and public agencies. This post focuses on three things all business should do as it pertains to their insurance policies:

  1. Amend current payroll and revenue - Insurance policies are rated off an “exposure basis.” The two most common are payroll and revenue. If you have not amended your payroll and revenue on your Insurance policies this year, you should do so. This could lower your monthly payments and total premiums.
  2. Change class codes if allowed - The WCIRB has proposed a special regulatory filing whereby class codes can be changed or eliminated if employees were on paid leave or engaged exclusively in clerical office activities. Depending on the original work being performed, this could lower overall premiums.
  3. Underestimate projections for the coming year - As mentioned above two common rating bases are payroll and revenue. It would be prudent to provide the insurance company with a low estimate for the coming year. This would lower your monthly payments, overall premium and it would lower the probability of any “minimum earned premium” conditions from coming into play. If actual payroll or revenue is higher than estimated, the additional premium can be picked up at audit or amended mid-year.

Right now it is important for all employers to manage cash flow. These tips will help employers hold on to cash so they can better operate their business.

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