A few weeks ago, NFIB sounded the alarm when it was announced that data error may have caused Pennsylvania businesses to overpay for their workers' compensation premiums this year.
A few weeks ago, NFIB sounded the alarm when it was announced that data error may have caused Pennsylvania businesses to overpay for their workers’ compensation premiums this year. The problem was the result of an unintentional mistake in the compilation of “loss costs,” which are used to calculate premium.
The state is correcting the error, but the correction will only be effective for policies issued after January 1, 2019. The possible overcharges began in April 2018.
NFIB sent a letter to the Department of Insurance requesting that small businesses be reimbursed by their insurers for any overcharges. In addition, many PA NFIB members responded to the announcement with their own letters, noting the impact of an overcharge on their small businesses.
It is clear that NFIB and its members’ comments had an impact. On December 14, Pennsylvania’s Insurance Commissioner, Jessica Altman, in her message approving the January 1, 2019 correction (https://www.media.pa.gov/Pages/Insurance-Details.aspx?newsid=359), acknowledged that “it is possible that some businesses paid higher rates than they should have.” Her statement urges all workers’ comp insurers to “determine as quickly as possible whether this is the case for any businesses they insure, and to reimburse any businesses which have overpaid…”
NFIB is hopeful that insurers will heed Commissioner Altman’s request and reimburse any small businesses that were overcharged as a result of the error. NFIB PA State Director Gordon Denlinger notes that “small businesses struggle with the cost of workers’ comp insurance, and any overcharge makes the situation even worse,” added Denlinger. “That money should instead be going to recruit new employees, to build the business, or buy new equipment.”
The Department of Insurance notes that it continues to research the issue to determine whether it needs to take further action. NFIB is watching closely to determine necessary next steps.
NFIB members who renewed or began their workers’ comp policies between April 1, 2018 and December 31, 2018 are urged to contact their insurer to determine whether they were affected by the error.
