Workers Comp Payroll Figures Affect More Than Just The Premium Audit

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Workers Comp Payroll Records Hang Around For Four Years+

A company’s workers comp payroll records are vital to the premium audit process.   Assessing a company’s payroll records is one of the auditor’s main job functions.

workers comp payroll stack of dollar bills
Copyright US Treasury

So your premium auditor has combed through your company books .  The auditor has generated a premium audit which the billing department will bill your company very soon – within 30 days.

Wow!, the concern about your workers comp payroll records  is over and now you can move on as that is the last you company has to worry about those records.   They will affect your company no longer in the Workers Compensation insurance process.

Hold on!   Not so fast – those payroll figures are with your company for four years or more.  Ouch!   But why, you ask.

My last article centered on a part of your Experience Mod sheets   Do you have your E-Mod sheets out?  Do you know where they are so that you can see my upcoming point?

Look at your Experience Mod Worksheets starting with page two.   Look down the left column – do you see that NCCI stores your workers comp payroll information on each of your policies.?  I would rather that you look at your own X-Mod worksheets.   If you do not have it available – which is not a good development an example provided by NCCI is below.   Ignore all the arrows except for #6.

workers comp payroll example graph
NCCI(c)

Do you see the Payroll column?   Hey, what is that doing here?   Well, the workers comp payroll in every Classification Code(see the Code Column) establishes your company’s risk under workers compensation.

From my last article, the Expected Losses – with payroll as one of the equation variables – are compared to your actual losses.

If you look at your complete Mod sheet, the policies go back four years or more.   I am just showing you one year of one policy as an example.

What do we know or do about the payroll figures?  If they do not look right, compare them to an annual payroll statement for that policy year.   Remember that payroll (remuneration) does not cover every item in your payroll summaries.

One of the secrets of Experience Rating is that higher payrolls usually will increase your indirect discount – the interesting Wt variable.    Or better yet, accurate payrolls make the Wt variable accurate.

If you decide to shop your workers comp policy around in the market.   What is one of the first things that a good agent, underwriter or consultant wants to see?   I ask for the Experience Mod Sheets and Loss Runs as the first documents.

Analytics and Payrolls

Now with so much credence given to analytics – your payroll figures on the Mod sheets can easily go back 20 years.  NCCI, WCIRB, and the independent rating bureaus store your Mod sheets for many years.    Analysts/underwriters/carriers, etc. will look back beyond four years.  One of the main areas examined is the workers comp payrolls.

©J&L Risk Management Inc Copyright Notice

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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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