Three Types Of Payroll (Premium Audits)
Payroll (Premium Audits) – the mother of all Workers Comp budget busters. There are three kinds of Premium Audits – also called Payroll Audits.
Usually, the audit is conducted within 60 days after the end of a policy period.
There are three types of premium/payroll audits:
- Self-Reporting – the employer faxes, calls in or electronically reports the payroll. Danger – how do you know what classification code each of your employees falls under for reporting purposes? You may be overpaying your premiums. Check your Work Comp insurance policy – are the job types in your company described by your Classification Codes? Are you sure there are not certain discounts that apply? Quite often, you may not have an agent. Ask questions now or you will pay more later. Self-reporting may be of great convenience but you must understand that there are over 600 different classification codes for a business’s employees to fall under for reporting purposes.
- Phone Reporting – The Workers Compensation insurance carrier will call you directly, or your accountant or some other outside financial consultant to obtain your payroll information. See #1 for the dangers of this type of reporting. Has anyone from your insurance carrier seen your operation? Most likely not at all. Are there certain mandated discounts that you are not receiving? Once again, you may not have an agent. Even if you do, only YOU know the business that you are in and the type of work that your employees perform daily. Once again, ask questions now or pay later. Do you have updated job descriptions for your employees? Have you expanded into other services over the years? Did you base your classification codes on your SIC code?
- This one causes special concerns. I will cover it in the next posting.
#3 and The Insurance Premium Auditor – who exactly are they and what is their role?
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