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.

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.

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.
2 Responses
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.
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.