Challenges
- Client’s company is plagued with high rates of employee injuries.
- The company was chronically underreporting payroll to insurers to avoid audit premium adjustments.
Solutions
- Symphony Transact ran a diligence process review of insurer loss and experience rating factors.
Outcomes
- We modeled the insurance costs of the business as if it were doing things the right way, and the client agreed that the risk required a QOE adjustment.
The Challenge
A security staffing company was plagued with high rates of employee injuries, which would increase the experience rating modification factor and in turn, insurance costs. Because the firm was not able to consistently predict seasonal demand, its actual payroll often substantially exceeded the payroll reported to insurers when applying for coverage. Ordinarily, this would result in a substantial “additional premium” charge from insurers.
The Solution
The Symphony Transact team conducted our diligence process, which included a review of insurer loss and experience rating factors — a comparison of loss and experience to ensure all claims have been reported to the agency, and a confirmation that the payroll reflected in the experience rating matches the payroll flowing through company financials.
The Outcome
Symphony Transact modeled the insurance costs of the business with more accurate accounting of staff and earnings, and accordingly recommended an EBITDA adjustment.
The client reviewed our findings and agreed that a Quality of Earnings adjustment was appropriate. This has allowed the client to better report, and obtain competitive pricing for, its business going forward.