BusinessInsurance's Sheena Harrison quoted Apex President Simon Feuer in her article about workers compensation audit reviews! One major point about this article is that APEX Services was the only company mentioned that does INDEPENDNET, UNBIASED reviews, working with brokers all across the country. What was surprising to us here at Apex was that these brokers were finding errors at such a low ratio. Apex Services finds errors and overcharges in 90% of our audits for employers, getting back refunds and making brokers who choose Apex to recover money for their clients and prospects look like heroes. If brokers stick to what they do best (finding the best possible coverage in the marketplace for their clients), and team up with experts in the workers compensation premium recovery field such as Apex Services, then they offer their clients an all-around package that can't be beat.

With workers compensation rates firming, some employers are pressing for reviews of their workers comp audits with an eye to lowering their premiums.

Some of the those reviews are turning up clerical errors and misclassifications that can cost employers as much as hundreds of thousands of dollars in overpaid premiums and adversely affect their financial profile.

By checking industry classifications and experience modification calculations, companies can ensure that their comp premiums are in line with their employment numbers and loss experience, said Lisa D. Costello, senior risk consultant at Willis North America Inc.'s strategic outcome practice in Overland Park, Kan.

“I think more clients will request this service as the (workers comp) rates increase and those increases get traction in the marketplace,” Ms. Costello said. “I think the better question is: How many employers or insureds know that there's even an issue?”

Ms. Costello said about one out of five audits that Willis reviews for clients have clerical errors, while about one in three ex-mods includes a mistake. About 10% of Willis' clients that go through the audit review process receive a partial premium refund, she said.

Aside from the total cost of workers comp coverage, Ms. Costello said such errors can affect a company's lending profile and even its ability to win contracts.

“This is a significant problem for contractors, because if their (ex-mod) is incorrect because of a clerical error, they're prevented from bidding jobs and they may not secure the bid because their mod is too high,” she said.

Simon Feuer, president of Apex Services Ltd., said he's seen more companies requesting workers comp premium recovery services as the economy has improved. The Cedarhurst, N.Y.-based company seeks refunds for employers that have overpaid their workers comp premiums.

“They see their premiums going up and they're looking for solutions to get their premium down to what it was,” Mr. Feuer said.

Most of Apex's clients include employers with annual premiums in excess of $100,000. Errors in their policies typically stem from miscalculated ex-mods, Mr. Feuer said.

Audit reviews can help companies looking to contain their workers comp costs, he said.

“We go and knock (the premium) down, and they have a better underwriting profile in the marketplace,” Mr. Feuer said.

Chicago-based AuditRate Inc., also a premium recovery service, found a classification error that resulted in more than $606,000 in overpaid workers comp premiums between 1996 and 2000 for a small Illinois manufacturer.

Howard Alper, chairman and CEO of Alper Services L.L.C., which owns AuditRate, said the error resulted in Byron, Ill.-based Quality Metal Finishing Co. being classified incorrectly as a foundry rather than a plumbing goods manufacturer. While the client has a foundry division, the rest of the business consists of lower-risk operations, Mr. Alper said.

The Illinois Department of Insurance ordered the company's insurer, Liberty Mutual Insurance Co., to repay the excess premiums in 2010. Liberty Mutual is appealing the decision and declined to discuss the case.

Mr. Alper said classification errors in workers comp policies occur regularly, particularly for industrial firms with various job functions. He said such companies usually need help to correct workers comp premium mistakes.

“The businessperson may have the judgment that it's wrong, but they don't have the tools to fix it,” Mr. Alper said.

Not all errors result in premium refunds for employers, said Judy Leo, New York-based area senior vp at Arthur J. Gallagher & Co.'s casualty risk management practice.

The broker reviews workers comp audits annually for its clients and finds clerical errors about 10% of the time, she said. In some cases, the review showed that companies underpaid their premiums and need to pay the difference, Ms. Leo said. Still, she said the process is beneficial because it helps employers catch mistakes before they turn into significant problems.

Willis' Ms. Costello said recovery audits are just a small part of risk management practices that can help employers manage their workers comp costs.

“The bigger piece of this is…the claims management or claims prevention,” Ms. Costello said.