Five Days Notice Until Proposed Premium Audit Date
Less than five days notice cannot be enough time for a employer to prepare for a premium audit. This is a concern that we are hearing from quite a few clients, blog readers, and fellow conference attendees. Recently, premium audit notices are being emailed and faxed to businesses giving the business owners or CFO’s less than week to prepare their records for a premium audit.
I am looking at two notices from clients as I write this post. I could understand the short notice if the business was small and/or assembling the records would not be very complicated. However, in both of the ones I am examining involve subcontractors, expense logs, and other documents that cannot be organized in time.
Five days (three business days) is a little much to ask an employer to prepare for an audit. There are premium audit guidelines usually built into every policy. If not; your state’s rating bureau is the organization (NCCI, WCIRB, etc.) that sets the premium audit rules.
The one clause that is usually in all of the rules states the audit will be conducted at a convenient time for all parties, or something along those lines.
If you feel that your company needs more time to organize your records, then fax or email a letter to the auditor that is setting his/her schedule that the premium audit date and time is not convenient. I do not recommend calling as this has led to confusion on “who said what” on rescheduling the appointment.
It is recommended to not completely disallow the premium auditor looking over your payroll and company records. The insurance carrier will then perform an estimated audit and bill. An estimated premium bill will usually be 200 – 300% more than what is actually owed due to the very liberal rules for estimated audits.
Please note I am not blaming the Workers Comp premium auditors on their schedules. They are given very heavy schedules in today’s insurance environment. He/she is trying to fit in as many audits as can be done in a week due to internal time pressures. That is the nature of the beast on anything with Workers Comp presently.
There is no exact time frame on extending the audit date. I would think that more than four business weeks or 30 calendar days would be the maximum number of days to extend the audit date.
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