Make Sure Your Policy Payroll Matches Your Budget Forecast

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Does Your Policy Payroll Match Your Budget Forecast?

Your policy payroll should match up with your budget forecast.   Payroll and certain benefits – known as remuneration among the Workers Comp premium auditors – should match your budget for your next policy year.  Just copying the payroll figures from your last years’ audit may result in giving your Workers Comp carrier having free use of your $$.

Picture Of Money Policy Payroll And Calculator
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This is a very prevalent situation as employers are shrinking their payrolls and laying off workers in a very down economy.  If your company has shrunk or your payrolls have declined, do not just allow the carrier to copy last years’ audit as a baseline.   For instance if your company has reduced its payroll by 18%, why would you have to pay the extra 18%?

This is a hotly debated item as often your agent may tell your company that it will be all refunded or credited back to your company at audit.   Why would you wait 13 – 14 months to recover what you knew was going to occur at policy inception?    The 13 – 14 month figure includes 12 months for the policy to expire and then 60 days for the audit and the results of the premium audit to concluded and reported by the carrier.

Woman Policy Payroll Counting Money
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This makes your projected budgets even more important when talking with your agent about your upfront policy premiums.  If you do not have an exact budget prepared approximately 45 days before your fiscal end of year, your company will not have very much leverage or substantiating documentation.

You may wish to even throw in a graph of how your company is projecting your next fiscal years’ payroll numbers.  As they say, a picture paints a thousand words – so do graphs.

Your agent and the carrier’s underwriter will require more than a verbal estimation.  This is when Excel(R)  can be very helpful along with your accounting package such as QuickBooks(R).    

The same applies if your company decides to use temporary workers or subcontractors instead of regular employees.  Using subcontractors invokes a new set of rules on whether or not they are actually employees.

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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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