Workers’ compensation premiums are the result of a very complicated formula. There are approximately 700 Classifications used, each of which has its own Rate (cost/$100 of payroll) which is re-calculated on an annual basis. Each company’s annual Payroll is applied to these Classifications and Rates (not every payroll dollar counts). The company’s loss history then comes into play in the form of an Experience Rating Modification which is promulgated based upon a moving three-year period. A variety of Discounts can also be applied along with charges for Terrorism, Assessments, and other factors.

Much of this data is collected by and administered by the National Council on Compensation Insurance (37 states), the New York Compensation Insurance Rating Board, the New Jersey Compensation Rating & Inspection Bureau, Workers’ Compensation Insurance Rating Bureau of California, etc. Each rating organization has its own rules, procedures, and manuals. These calculations, rules, and procedures are then applied by the insurance companies underwriters, clerks, actuaries, auditors, adjustors, legal departments, etc.

Given the complexity and magnitude of the data being managed, there are substantial opportunities for errors that result in millions of dollars of premium overcharges.

Simply stated, The Leahy Company’s role is to understand the various rules, procedures, and calculations and to make sure they are adhered to by the insurance companies and by the rating organizations themselves. We know where to look in order to identify and correct the types of errors that result in premium overcharges.

In a typical client file we will examine policies, audits, and loss runs going back at least nine years. This data is compared to the Experience Rating Worksheets with the purpose of identifying clerical errors, claims that do not belong in the calculation or are incorrectly valued, missing or mis-stated payrolls, incorrect or missing classifications, and mistaken applications of Rating Board rules.

There are dozens and dozens of mistakes that we look for, and we usually find one or more in each client file that we review.

What Our Clients Are Saying...
“Thank you for your recently completed 6th review of the workers’ compensation premiums for our facility. Your company’s expert knowledge of Experience Modification Rating calculations has resulted in the recovery of over $165,000 in premium overcharges since our initial engagement in 1995.”


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