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Five Days Notice May Be Yellow Flag For Premium Audits

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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.

Picture of Workers Holding Magnifying Glass Five Days Notice Premium Audit
(c) 123rf.com

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.

Graphic Five Days Notice Calendar
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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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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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