When an employer doesn’t respond to a workers compensation audit request – What happens?

Bad things can happen when an employer blows off a workers compensation audit request from their insurance company! Let’s take a look..

It happens all the time, a business owner gets a request from their insurance company to comply with the audit process of the workers compensation policy and they don’t reply. It may be a note from an auditor who has scheduled a day and time to meet with the business owner and complete a physical audit or it may be as simple as a self audit form that is to be completed by the business owner and mailed back to the insurance company. It really doesn’t make a difference in what form the audit is to be conducted. When a business owner doesn’t respond to the request the insurance company will place in motion a series of actions that will have a negative impact on the employer, policyholder, business owner.

Each company will have it’s own preferred method of handling uncooperative policyholders. They are also given, by regulators, a fair amount of latitude when dealing with this situation.

Here’s a few items of consideration:

  • Perform an Estimated Audit – This is where the insurance company takes the original deposit premium, applies a multiplier of 25-300%, produces an audit bill for the additional premium amount and sends it to the policyholder for payment.
  • Cancel the Policy – When deemed uncooperative, the policy may be cancelled and any earned premium (outstanding premium owed) will be billed.
  • Rating Authority Reporting – When unpaid workers compensation premium exists it is usual for the insurance company to report that unpaid premium to the rating authority who then places the employers name on a list. It may then be impossible to secure another policy before the outstanding premium is paid.
  • Collections – Unpaid premium is turned over to a collections agency for collection.
  • Litigation – The insurance company may sue the policyholder for unpaid premium.

What happens when an employer policyholder doesn’t respond? Bad things! So make sure you complete your audit. If you have a problem be sure to look up a workers compensation consultant for help with an audit dispute!

Hope this helps you out! Thanks!