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Work Comp Premium Audits Do Not Have 75% Inaccuracy Rate


Are Work Comp Premium Audits Only Correct 25% Of The Time?

We review Work Comp premium audits for employers as one of our core services.   J&L Risk Management Consultants has been reviewing work comp premium audits for over 20 years.

Graphic of 25 % work comp premium audits emblem from website
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We have analyzed enough data in our premium reviews to have a baseline number for the % of premium audits that we have found to be inaccurate.

I received an email the other day from a vendor that does or claims to do what we have been doing for many years.  The company says that 75% of work comp premium audits are wrong.   This seems to be an inflated number.

The 75% number is even high if one takes into account the very small inaccuracies that do occur in premium audits.  Inflating percentages as a part of marketing or advertising possibly harms the industry as a whole.

I assume one could take a weaker position that a premium audit is inaccurate and count that in as an inaccuracy.   We, as a company, have never done or will never espouse a weak position as a basis for a dispute.

Hand Presenting Work Comp Premium Audits With Calculator And Pen

Disputing an audit is a serious business.  We often receive phone calls from employers that have disputed an audit with no basis.   That is a great way to harm the relationship between your agent, carrier, and the insured employer.

We encourage employers to have some type of number on which to base a dispute.  There are many areas where a premium audit can have mistakes.    The first piece of advice we always give is – “Did something change in your business that would make you a higher risk?”

Changes in a business or rapid growth can cause an employer to experience a larger audit bill than expected overall.  However, the best way to reduce Workers Comp premiums is to always question any bill or audit on receipt.

Part II – Next Week – What Are Some of the Mistakes We See In Work Comp Premium Audits?

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2 Responses

  1. I have heard these absurd claims several times over the years and really don’t understand how anyone can say it with a straight face. Now it would be one thing to say that based on their reviews of their own clients, they have found some type of error in 75% of those, but they claim this percentage for all policies written nationwide.

    Now lets do some simple math to point out what a load of aggrandizement this claim is. Now lets set the baseline with this example. Those who go to a lawyer for any type of legal issue would have a problem 100% of the time. Now lets assume that anyone making this 75% error rate claim with premium audits happens to review say 1,000 audits per year and that 100% of them have an issues of some type to be generous.

    Now just be be conservative and for simple math, let say that nationwide there are 1,000,000 policies written and/or audited per year. The actual policy count per year is actually several million policies but were keeping this example simple. Now for the simple math of 1,000 / 1,000,000 = .001% and thats being generous with 100% of their audit reviews having some sort of an issue and there only being 1,000,000 policies audited.

    Now at a conservative .001%, you aren’t even a blip on the radar, and certainly no where close to 75% of all audits done. Anyone who touts this nonsensical national percentage of premium audit errors with such creative math skills you should take with a grain of salt. If it sounds to good to be true, then do you really want them looking at your books, let alone making a mountain out of a .001% mole hill at best.

    Just my 2 cents as a seasoned premium auditor, CG.

  2. Carlos, thanks for your timely comment. I forgot to finish my thought with a new article this week. I will diary my next week’s article to include my take on this situation. My concern is that claiming a 75% error rate hurts the premium audit industry on both sides of the table or employer and carrier.


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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