Premium audit is a part of the workers compensation policy process. As a matter of fact it has its own section in the policy that tells you what the insurance company can do and lines out the responsibilities of the employer. Here’s a few tips about workers compensation premium audits.
Be prepared for an audit – I might understand the confusion surrounding a workers comp audit for a new employer, one who has not been exposed to the audit process. But that doesn’t explain the deer in the headlights look we’ve seen from many employers where it seems every year they’re surprised that the workers compensation insurance company would dare want to look at their payroll records! What’s up with that? A word of wisdom, preparation. An employer should get their books in order, have the payroll reports that correspond with the policy period organized and ready to hand over to the auditor. Check out our website page on How To Prepare For An Audit for helpful information you may use or be sure to read more on our blog about how to prepare for your audit.
Don’t put the auditor off – The auditor is on the clock to gather the rating exposure data (payroll) from the employer, compile it and report it back to the insurance company within a certain period of time. Usually 30 days. Just get it done, let alone it’s just rude to put someone off.
Don’t pawn the auditor off on another employee or your accountant – The auditors job is not only to gather payroll data but to determine if your business is properly classified. Class codes are very important to the whole workers compensation system and as an employer you do not want your accountant or an employee answering the probing questions the auditor will ask about your business operations.
Ask for a copy of the audit – The auditor should complete their work while at your shop or place of business. Sometimes they will want to gather the information and take it back home to complete. That’s never a good idea. But you should always ask to receive a copy of the auditors worksheets or work papers once they have completed.
Our experience with workers compensation audits shows that those employers who are prepared, who have done their homework and who fully understand the audit process have better audit results. Those employers who remain unprepared, uncooperative or unresponsive usually face automatic non-renewal or policy cancellation, suffer from levied penalties backed by the state, collection efforts, litigation and the inability to secure future coverage. That’s right, insurance carriers report unresponsive employers to the state authorities and or rating bureau. An employer who has an unpaid workers compensation bill will find it mostly impossible to secure future coverage until they have settled up on their past debts.
So what’s our advise for premium audits? Do what’s right and accurately complete your audit in a timely manner!
Hope this helps you out! Thanks for reading!