When your workers compensation policy was issued the policy premium was based on estimated payrolls. After the policy expired an insurance auditor reviewed your records to determine the exact payrolls. That audit became the basis of your firm’s final premium. While the process is often straightforward, there are pitfalls that employers should recognize; audits are NOT as clear cut as they may seem. Errors are found in as many as 50% of all premium audits. Here are some red flags that you are paying more than necessary
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- During the audit only a few questions are asked.
- The auditor does not volunteer to leave copies of the worksheets.
- A classification that was not on the policy is added to the audit.
- A classification that was on the policy is omitted from the audit.
- Employees are paid a significant amount of overtime.
- The effective date of your policy differs from the effective date of the experience modification.
- Your policy’s modifier is labeled as either “contingent” or “preliminary.”
- The policy is frequently endorsed with changes to classifications, rates or payrolls.
- The NCCI or your state’s rating bureau responded to a question or complaint with an unfavorable decision.
- You have had a merger with another company within the last 3 years.
- Your company has expanded into new states
Review these Red Flags and see if any have occurred. We will have more information next week about policy premium audits. Sign up for the RSS feed so you do not miss this important information. The RSS feed is a blue icon in the upper right-hand corner of the blog. We appreciate Norm Goodman at www.zapcomp.com for providing this information. He will bring us more helpful tips next week. Find out more about ZapComp in our Resources List http://www.reduceyourworkerscomp.com/resources.php. ZapComp’s fees are contingency based — if they don’t save you money, you don’t pay a dime!
