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Premium Audit and Reserve Question – How Often Per Policy Year?


Reserve Question And Premium Audit = Not The Same Thing

We received this reserve question earlier this week. I thought I would address it now as there seems to be some confusion on the premium audit and reserving process for Workers Compensation. The emailed question was – How often should we do premium audit and/or reserve reviews on our Workers Compensation claims?

Picture of Woman Draw Question Mark Reserve Question And Premium Audit

I thought it would be best if I separated the question in two parts. As an employer, you do not have to do a premium audit with your insurance carrier more than once per year. The premium audit is more of an audit of the mechanisms that result in your Workers Comp earned premium. Your insurance carrier will audit your company’s premium with 30 – 60 days after your policy expires.

The best answer would be immediately after the results of your premium audit are provided to your company by your Workers Comp insurance carrier. Once the premium audit bill is sent to you, the clock starts running on how long your company has to dispute or even question the premium audit.

As I have posted very often in this blog, most states allow your company to have the audits for the last three years  reviewed by either you or a company that has an expertise in this area – shameless plug for J&L.

Hand Holding Calculator Reserve Question Icon

One of our areas of concern is that we are contacted by most employers just after their policy has expired. That concerns me and our auditors very heavily as that means if an error is found, your company just lost 1/3 or more of your possible premium overcharge recoveries. At the expiration of each policy, the policy from three years ago can no longer be reviewed along with the audit.

 I will cover reserve reviews in the next post.

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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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