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Payroll (Premium Audits) – Mother Of All Workers Comp Budget Busters


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:

Chicklet - currency Payroll (Premium Audits) coins and dollars
Wikimedia Commons – U.S. Department of the Treasury
  1. 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.
  2. 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?
  3. 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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James J Moore - Workers Comp Expert

Raleigh, NC, United States

About The Author...

James founded a Workers’ Compensation consulting firm, J&L Risk Management Consultants, Inc. in 1996. J&L’s mission is to reduce our clients’ Workers Compensation premiums by using time-tested techniques. J&L’s claims, premium, reserve and Experience Mod reviews have saved employers over $9.8 million in earned premiums over the last three years. J&L has saved numerous companies from bankruptcy proceedings as a result of insurance overpayments.

James has over 27 years of experience in insurance claims, audit, and underwriting, specializing in Workers’ Compensation. He has supervised, and managed the administration of Workers’ Compensation claims, and underwriting in over 45 states. His professional experience includes being the Director of Risk Management for the North Carolina School Boards Association. He created a very successful Workers’ Compensation Injury Rehabilitation Unit for school personnel.

James’s educational background, which centered on computer technology, culminated in earning a Masters of Business Administration (MBA); an Associate in Claims designation (AIC); and an Associate in Risk Management designation (ARM). He is a Chartered Financial Consultant (ChFC) and a licensed financial advisor. The NC Department of Insurance has certified him as an insurance instructor. He also possesses a Bachelors’ Degree in Actuarial Science.

LexisNexis has twice recognized his blog as one of the Top 25 Blogs on Workers’ Compensation. J&L has been listed in AM Best’s Preferred Providers Directory for Insurance Experts – Workers Compensation for over eight years. He recently won the prestigious Baucom Shine Lifetime Achievement Award for his volunteer contributions to the area of risk management and safety. James was recently named as an instructor for the prestigious Insurance Academy.

James is on the Board of Directors and Treasurer of the North Carolina Mid-State Safety Council. He has published two manuals on Workers’ Compensation and three different claims processing manuals. He has also written and has been quoted in numerous articles on reducing Workers’ Compensation costs for public and private employers. James publishes a weekly newsletter with 7,000 readers.

He currently possess press credentials and am invited to various national Workers Compensation conferences as a reporter.

James’s articles or interviews on Workers’ Compensation have appeared in the following publications or websites:

  • Risk and Insurance Management Society (RIMS)
  • Entrepreneur Magazine
  • Bloomberg Business News
  • WorkCompCentral.com
  • Claims Magazine
  • Risk & Insurance Magazine
  • Insurance Journal
  • Workers Compensation.com
  • LinkedIn, Twitter, Facebook and other social media sites
  • Various trade publications


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