Why Are Your Workers’ Comp Premiums So High? 5 Hidden Overpayments Your Insurer Won't Find

For most businesses, Workers' Compensation insurance is one of the top five operational expenses—a massive, unavoidable cost. You pay the premium, you go through the annual audit, and you trust that the final number is correct.

That trust is likely costing you tens, or even hundreds, of thousands of dollars.

The Workers' Comp system is a "black box" of complex actuarial data, byzantine state-level regulations, and opaque calculations. It is intentionally complex. Insurers rely on this complexity, and their "good enough" audits often miss the deep, systemic errors that inflate your premiums year after year.

At 2nd Look Services, our team of financial specialists and our proprietary AI were built to open that black box. We conduct workers' compensation premium audits that go far beyond a simple payroll check. We find the hidden overpayments.

Here are the five most common and costly errors we uncover.

5 Costly Errors Hiding in Your Workers' Comp Premiums

1. Employee Misclassification

This is the single most common and costly error. Every employee is assigned a "class code" based on their job risk (e.g., a "clerical/office" code is cheap, a "roofer" code is expensive). We consistently find businesses where a low-risk office worker has been incorrectly classified as a higher-risk field worker.

This one mistake, applied to even a few employees over several years, can lead to a massive workers' comp overpayment.

2. "E-Mod" (Experience Modifier) Errors

Your "E-Mod" is your company's "credit score" for insurance. It's a complex multiplier that directly impacts your premium (e.g., a 1.0 is average, a 1.2 means you pay a 20% surcharge).

This E-Mod is calculated using years of your past claims data. We find this data is often wrong. An open claim that was never closed, a subrogation that wasn't credited, or a simple data entry error by the insurer can incorrectly inflate your E-Mod for three years or more, forcing you to overpay. This is a perfect target for our AI, which can analyze years of claim data in minutes.

3. Medical Bill Overpayments on Claims

This is where the individual "medical billing errors" (like upcoding and unbundling) come back to haunt the business.

When one of your employees gets injured, the insurer processes their medical bills. If the insurer overpays on that claim—approving duplicate charges or upcoded services—that overpayment is charged back to you in the form of a higher claim cost, which in turn raises your E-Mod. You end up paying for your insurer's lazy claim processing for years to come.

4. Payroll Audit Mistakes

Your premium is based on your payroll, but not all payroll is created equal. Many businesses don't realize that in most states, overtime pay can be partially or fully excluded from the premium calculation. Bonuses, severance, and other "perks" may also be excludable.

If your annual audit incorrectly includes this payroll, you are directly overpaying. This is a simple error that a basic audit misses, but a workers' compensation premium audit from an expert team will catch.

5. Mismanaged Open Claim Reserves

When an employee has an open claim, the insurer sets aside a "reserve" of money they expect to pay. This "reserve" amount is used to calculate your E-Mod. The problem? Insurers often set reserves unnecessarily high or fail to close them after an employee has recovered.

This single "open reserve" on a claim from two years ago could be the reason your premiums are 15% higher today.

Your Premium Is Not Set in Stone

Your Workers' Comp premium is not a fixed price. It is a complex, data-driven calculation—and calculations can be wrong. You need a team that knows where to look.

Our experts, armed with proprietary AI, audit the auditors. We analyze your policies, payroll, class codes, and claims history against millions of pages of state-level regulations and insurer data to find every single dollar you are owed.

Stop Overpaying for "Trust"

Don't let a "black box" drain your company's bottom line. Get the certainty you deserve. Our team is standing by to provide a no-obligation analysis of your past Workers' Compensation policies. We find what your insurer missed.

Call us today at +1 (248) 497-5869 or book your free premium analysis.