Applying retroactively for a credit that has already been rejected by the insurance company

Parker, Smith & Feek identified an opportunity to bring immediate value to a local mechanical contractor’s bottom line with our expertise in both construction and insurance. This client specializes in mechanical solutions for all types of projects included but not limited to; mixed-use, institutional, residential, office, and retail.

The contractor had a desire to pursue a credit they had previously applied for but had been rejected by the insurance company.

The credit missing was for an out of state workers’ compensation policy. Since Washington State is a “monopolistic” state it only allows Labor & Industries to provide workers’ compensation benefits to companies with employees working and living in the state. However, construction firms with multi-state offices are required to provide a separate workers’ compensation policy for employees domiciled outside Washington State.

Parker, Smith & Feek faced many challenges in trying to add this previously rejected credit. First, Parker, Smith & Feek had to present our findings to the National Council Compensation Insurance (NCCI) who oversees rates and classifications for private insurance companies providing compensation insurance in non-monopolistic states.

After Parker, Smith & Feek had presented their findings; NCCI decided that the missing credit should apply based on precedent established in earlier case law.

The next challenge came in working with the current workers’ compensation insurance carrier for this contractor. Our objective was to get this credit to apply not only to the current insurance term, (12 months) but retroactive back to the maximum that was allowed. There were at least three previous years the contractor had been rejected for this credit. At no point was the insurer required by law to recognize the credit on a retroactive basis. The precedent set in the case law applied only to policy periods moving forward. Parker, Smith & Feek’s challenge was to create an argument as to why the client deserved a revision of previously completed audits.

After many months and numerous conversations with NCCI, the insurance carrier, and the mechanical contractor team, Parker, Smith & Feek was able to get the credit applied to past policies. The addition of this credit resulted in significant premium reductions from past and present policies.

The credit was also applied indefinitely moving forward allowing the contractor to better manage the cost of their compensation insurance creating the most competitive business situation and effectively lowering the total cost of risk.

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