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Premium Audit Report vs Bill vs Statement- Important Reader Question

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Newsletter Reader Asks What Is the Difference Between a Premium Audit Statement, Premium Audit Bill, and Premium Audit Report?

A premium audit report, statement, or bill all refer to the premium audit process.   Many employers think these mean the same report.   Each one is a different report on the same result.

cat playing with work comppremium audit report lizard
Public Use License – Basile Monin – Wiki

Each insurance carrier possesses its own business language for each of the three terms.    Any confusion on the three terms results from how each carrier bills for their premium audit results.   No one standard exists for the premium audit billing process.

Premium Audit Report

The premium auditor generates a premium audit report once they finish auditing your payroll and other company records.    The premium auditor may meet with the employer contact to provide a verbal report of their findings before they leave the company premises.    The auditor usually covers how they arrived at their numbers.

The auditor usually provides the auditor’s workpapers at this meeting.   If the auditor does not, the employer can ask for a copy.   The workpapers can usually clear up many of the questions an employer asks about the results.

The auditor may take the audit material obtained from the employer offsite.   Much debate exists on whether an auditor can carry any of the company financials offsite.

Unless there are extenuating circumstances, we recommend that an employer provide the auditor with a comfortable work environment to complete their task.   No policy provision allows for material to be taken off the employer premises during an audit.

The offsite decision remains totally up to the employer.

If the next two – premium audit statement or premium audit bill – arrive without the audit workpapers and the premium audit report, a request should be made in writing to the insurance carrier. for both of these important documents.

The premium audit report may contain the audit workpapers.

Premium Audit Statement

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The premium audit statement or PAS usually breaks down the premium auditor’s finding into a summary form that shows Classification Codes and payroll amounts.   Often, the premium audit statement will not show  the final billed numbers.

The premium audit report may be enclosed with the premium audit statement.

Often, the PAS will denote – This Statement Is Not Your Final Bill.   Some carriers do not send the premium audit statements to their insured employers.    The carriers often combine the premium audit statement and bill into one.

If your company receives a premium audit statement without the workpapers, we recommend you request those by mail or email to the contacts on the PAS.

The premium audit statement should not be confused with a statement if your company is overdue with a premium payment.

Premium Audit Bill

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Wikimedia – At.morey.tota

The premium audit bill closes  out the audit process.   The premium audit bill may contain all the premium audit report, workpapers, and premium audit statement all in one package.

As mentioned previously, each carrier has its own method of billing out your audited premiums.   No premium billing standard exists other than the rating bureau rules, and the policy provisions.

Any undisputed parts of the premium bill should be paid timely.  One large error made by employers comes from not paying the undisputed premiums if one part of the bill is disputed.

Conclusion or Confusion

If my attempt to explain these somewhat confusing terms has confused you further, please contact J&L through our Contact Us page with any questions.   We answer most inquiries within one business day.

The auditor workpapers represents the auditor’s detailed work.   Always make sure you ask for these and do review them even if they are contained in the premium audit report, statement, or final bill.

©J&L Risk Management Inc Copyright Notice

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2 Responses

  1. This was confusing, so I’ll help you out. Let’s use a sports analogy to help those non auditor types.

    Let’s work backwards to clarify things using golf, basketball, and baseball in this explanation.

    Final audited Bill – This would be whoever won or the close up view of the audit (i.e Tiger wins, Raptors win, Cubs win, etc – you get the idea).

    Billing statement – More detail than the close up view showing class codes, payroll for each code, etc (Scoreboard view – i.e Tiger’s strokes count for all 18 holes, basketball points for each team by quarter, the box score by inning, hits and runs scored during the game for baseball fans, etc).

    Audit worksheets – This is the meat and potatoes of the entire audit process which shows the maximum amount of information and usually resolves most audit issues (i.e. The strokes for all golfers in the tournament that tiger won, the shots, rebounds, steals, assists, blocks for all players on both teams, all the baseball players hits, times at bat, steals, errors, etc for both teams or in a series of games.)

    Thank You, CG

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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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