Sometimes it seems like the whole workers compensation audit process is like a scene out of the Wizard of Oz! Fanciful, full of whispers, secrets and unknown destinations!
Not a day goes by that we’re not asked a basic question about the workers comp audit process, premium generation process or some other premium related topic by an employer taken off guard by receiving an unexpected bill from their work comp insurance company. I’ve written about this before (and will again) and can only hang my hat on the lack of communication found throughout the whole process.
Lack of communication in this business can be costly. Whether it’s an employer who has not fully described their business operations to an agent trying to properly classify the employers workers, an agent who doesn’t ask the right questions or who makes incorrect assumptions; an auditor who mistakenly reclassifies employees or who does not pick up a valid uninsured subcontractor exposure; or an insurance company who sends cryptic documents with little or no explanation as to what’s being sent or of the effects involved; most of the issues we deal with in our daily life as independent workers compensation consultants revolve around communication.
Some things are etched in stone…others are not. The workers comp audit procedure, while it may vary a little from company to company, is fairly simple and goes something like this….after the policy has expired, send someone out there to interview the employer and gather factual information about the payroll (remuneration) and what the employees do, bring it back to the insurance company, compare it with how the policy was originally set up and make any adjustments as to the way it actually was. Hum…while it sounds simple, it leaves a lot of room for assumption. Sprinkle a little poor communication in there an all of a sudden you have mistakes being made that may cost the employer additional premium they shouldn’t have to pay or the insurance company not collecting the premium they are rightfully due.
If you find yourself facing an audit problem or need help with an audit dispute, be sure to contact an independent workers compensation consulting firm for assistance. There’s a lot of great objective, ethical help out there when you need it…so be sure to ask.
Knowledge about the audit process and procedure will help eliminate common mistakes and errors. So I think the best advice I can give to employers, auditors, insurance agents and insurance carriers is to learn about those things etched in stone, communicate in a factual manner about those things that are dynamic and expose the Great Oz!
Hope this helps you out! Thanks!
