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Understanding Premium Or Payroll Audit Process Myths vs Truths

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Premium Or Payroll Audit Process

The premium or payroll audit process contains many Myths and Truths. I was going back through some of the post over the last few weeks. In The Five Keys To Saving On Workers Compensation post, I had said I would cover #5 – Understanding Your Premium Audit. The premium or payroll audit is one of the most misunderstood areas of Workers Compensation. I thought I would cover some of the myths about your yearly premium audit.

Graphic Of Paper Letter Notes And Calculator Audit Process Plan
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Myth – The premium auditor is trying to help my company.

Truth – The premium auditor is there to collect as much premium as possible allowed under the law.

Myth – My premium audit is a smooth process. The auditor comes in, and I usually owe a bill that I pay right away.

Truth – The audit process should be viewed the same as a tax audit. Please see the preceding audit Myth/Truth for clarification.

Myth – I stand a great chance of getting a refund after my premium audit.

Truth – We have found that over 70% actually result in a premium bill. Less than 10% of premium audits return money to the employer

Myth – The premium auditor works for my insurance carrier.

Truth – There are more subcontractors doing Workers Comp premium audits than insurance company personnel.

Myth – I disputed my premium audit back to my agent and he/she said everything looked great.

Truth – There are specific instructions on how to dispute a premium audit. Appealing to your agent is not one of them.

Myth – My company can ignore the premium audit bill and pay it later.

Truth – You may end up having your current policy canceled if you do not dispute or make arrangement for paying your company’s premium billing. I have posted this very often – Never Ignore A Premium Bill

Myth – I received a small refund last year and this premium audit bill is not that large. I am going to go ahead and pay it.

Truth – Just because you have not been hit with a large premium bill does not mean that you are not being overcharged.

Myth – There are no companies out there except my agent that can help me if I have a question on my premium audit.

Graphics of bowling myth and truth Audit Process With White Background
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Truth – There are quite a few companies that aid employers with their premium audits such as J&L.

Myth – I can only dispute the current year’s Workers Compensation policy or premium bill.

Truth – Except in a few states, you may “look-back” for three years for any policy or premium audit mistakes that resulted in overcharges.

These are only a few of the myths about the Workers Compensation Premium or Payroll Audit process. If you have any further questions, please contact us at [email protected] or [email protected]

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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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