Shorting Employers – California Workers Comp System Lookback Period
According to the California Workers Comp System rules, the employers are being shorted. We have been very fortunate to have a large amount of our premium and reserve review services in California. I feel the employers in the state are not necessarily being treated fairly. The reason is the look-back period has been shortened severely in California. This is unfortunate as CA policies seem to have the highest error rate.
In California, the employer may only have their Workers Comp policies and audits reviewed for one year in the past. Most states allow a three year look-back period. I have had to explain this conundrum to more than a few aggravated California employers. Basically, when a mistake is found, that mistake may possibly be in triplicate in other states. A small error turns out to more significant when tripled.
The other side of the coin means carriers cannot audit beyond one year in the past. However, I have rarely seen an premium auditor review more than one year in California.
Is it still worth the effort to review Workers Comp policies and premium audits in CA? Yes, as once the error is found, it usually becomes a permanent fix for the future. Our largest single error was found in a California Workers Compensation audit.
2019 Update- The California Workers Comp system has not changed the lookback period length whatsoever. The WCIRB changed many rating rules over the last three years. Two years of premiums remains off the table in performing premium audit reviews. I do not see this changing any time in the future unless a court case would redefine the audit scope length.
I will update this article if the situation changes in the future.
©J&L Risk Management Inc Copyright Notice