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Workers Compensation Audits – How Many Is Carrier Allowed Per Year?

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Workers Compensation Audits Rules

We received this question recently from a manufacturer in California.  The number of Workers Compensation audits that can be performed by a carrier should only occur once per policy year.  The Workers Comp policy that you have received from the carrier should have all the Workers Comp audit rules in it.  It is usually in the last few pages.  Each state has its own set of Workers Comp audit rules.

Picture Of Hand Holding Paper Workers Compensation Audit Items Graphics
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A very interesting fact we have noticed is that some agents have included on the policy that a certain insured should be audited more than once per year.

If your company is being audited more than once per year, check your insurance policy to see if more than one audit has been scheduled for the policy year.

At the next renewal,  request that your agent change the frequency of audits to reduce the number of audits per year.  Some carriers require that certain employers be audited more than once per year.  Those are rare.

In reality, the insurance carrier may perform an audit or audits any time during the policy year and for the last three policy years.   Usually, Workers Comp insurance carriers will not audit for the prior years and instead center on the policy that has just expired.

We heavily recommend that you do not try to ignore the audit requests by the carrier or any audit billing.  If you do not allow the insurance carrier access to your company’s payroll records, the insurance company may cancel your policy and charge a very huge penalty until they are allowed access to your payroll records.

The auditor has a time limit to perform the audit.   If there is a large delay, the premium auditor may just do an estimated audit and then triple the premium owed as a penalty.  This is allowed in every state’s insurance laws and rules.

Business Woman Workers Compensation Audits Holding File
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Even in the very bad economy, insurance carriers will likely let you pay off an audit bill over time.  Please make sure that you call the carrier before the due date of the bill if you are unable to pay it in full. If you are disputing any part of the work comp audit bill, it is a good idea to pay the undisputed part of the premium.  It is not only a good idea, but is required by rule.

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Table of Contents

James Moore

Raleigh, NC, United States

About The Author...

James founded a Workers’ Compensation consulting firm, J&L Risk Mgmt 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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