It sounds as if Servisair (Swissport) has some badly maintained accounting and payroll records if they did such a poor job of providing initial risk data to the insurer (it would have been helpful to know what the provisional annual premium was to tell how significant the audit adjustment was). It would also have been nice to know the coverage period under dispute in this claim since it appears that Swissport acquired Servisair in 2013 and you wonder if the buyer felt they were getting stuck with liability for a previously unasserted claim against the seller of Servisair.
Congratulations Liberty Mutual! Good job on documentation and not letting someone take advantage with the clerical code. It happens more than some people might think.
There is 0 chance that Servisair had any doubts about what they were doing. I would hazard a guess that they knew exactly what they were doing and had hoped to get away with it. Thank God the appeals court wasn’t in San Fran (is that the 9th?). They’d have ordered Liberty to create a ‘safe space’ for Servisair and proclaimed that their employees were not only gender neutral but class code neutral too !!
So, if you found out Sevicair had 95% of its payroll on clerical employees and 5% on pilots, would you fly with them frequently or at all? Me neither; I’d stay on my iceberg, slow as it may be.
Where was the agent/broker on this transaction? And how about interest on $3.4 million? Playing games with classifications, even if you get found out at audit, provides superior cash flow to the policyholder and lost investment income to the carrier.
agree. who filled out and submitted app? also, are there no preliminary test audits anymore on substantial accounts? not letting insured off hook either btw.
Servisair should be glad that the dispute was with Liberty Mutual instead of Texas Mutual. They should also be glad that the miscoding was not determined to be intentional. Why? Per Texas law, intentional miscoding is a felony, if it results in a decreased premium of more than $2,500. Responsible employees(risk manager) at Servisair and the agent could be prosecuted. The additional premium is due and payable immediately. The insurance code has no provision for interest on the money. The broker might want to review their E&O policy.
Liberty is justified in collecting the right premiums for the right classifications. Before they wrote the account of this size they would have would have done their past checking on prior claims and payrolls. At a $3.5MM error (intentional or not), the insured and their internal risk manager should be happy that no criminal charges are being brought against them. Not sure why some of the comments made felt that the agent should be liable if the client gave them the payroll info unless they knew of the manipulation of the classification changes. Many large firms such as Servicair sub-out maintenance of the aircrafts. Sounds like Liberty must have picked it up which maybe the explanation here…
It sounds as if Servisair (Swissport) has some badly maintained accounting and payroll records if they did such a poor job of providing initial risk data to the insurer (it would have been helpful to know what the provisional annual premium was to tell how significant the audit adjustment was). It would also have been nice to know the coverage period under dispute in this claim since it appears that Swissport acquired Servisair in 2013 and you wonder if the buyer felt they were getting stuck with liability for a previously unasserted claim against the seller of Servisair.
Congratulations Liberty Mutual! Good job on documentation and not letting someone take advantage with the clerical code. It happens more than some people might think.
One does not want to mess with Liberty Mutual on audit situations. They have been at the WC business a long time.
I had pre audit by the Company before placing a new insured or moving to new carrier large accounts.
Odd that a company with 15,000 employees goes the GC route for Comp..
A trick as old as the books…
There is 0 chance that Servisair had any doubts about what they were doing. I would hazard a guess that they knew exactly what they were doing and had hoped to get away with it. Thank God the appeals court wasn’t in San Fran (is that the 9th?). They’d have ordered Liberty to create a ‘safe space’ for Servisair and proclaimed that their employees were not only gender neutral but class code neutral too !!
So, if you found out Sevicair had 95% of its payroll on clerical employees and 5% on pilots, would you fly with them frequently or at all? Me neither; I’d stay on my iceberg, slow as it may be.
Where was the agent/broker on this transaction? And how about interest on $3.4 million? Playing games with classifications, even if you get found out at audit, provides superior cash flow to the policyholder and lost investment income to the carrier.
PierreTruTru say, methinks the agent’s E&O coverage is now going to come into play!
I agree, Pierre. Thinking the agent’s E&O will be the next stop for the insured.
agree. who filled out and submitted app? also, are there no preliminary test audits anymore on substantial accounts? not letting insured off hook either btw.
Servisair should be glad that the dispute was with Liberty Mutual instead of Texas Mutual. They should also be glad that the miscoding was not determined to be intentional. Why? Per Texas law, intentional miscoding is a felony, if it results in a decreased premium of more than $2,500. Responsible employees(risk manager) at Servisair and the agent could be prosecuted. The additional premium is due and payable immediately. The insurance code has no provision for interest on the money. The broker might want to review their E&O policy.
Liberty is justified in collecting the right premiums for the right classifications. Before they wrote the account of this size they would have would have done their past checking on prior claims and payrolls. At a $3.5MM error (intentional or not), the insured and their internal risk manager should be happy that no criminal charges are being brought against them. Not sure why some of the comments made felt that the agent should be liable if the client gave them the payroll info unless they knew of the manipulation of the classification changes. Many large firms such as Servicair sub-out maintenance of the aircrafts. Sounds like Liberty must have picked it up which maybe the explanation here…