Workers Comp Premium Auditor’s Job Now Much More Complex
One of the results of the COVID-19 pandemic is the effect on the workers comp premium auditor’s job. The complexities of auditing workers comp policies become more pronounced with multi-state employers.
I first realized the results with an article published by Mark Walls of Safety National. Having a non-premium auditor individual write an article on the workers comp premium auditor’s job was an eye-opener.
Mark Walls’s Article From Last Week
You can find Mark Walls’s article here on ITL. The article was summarized as:
“Controversy relating to workers’ comp premium audits existed long before COVID. However, the pandemic made things much worse. Many states issued emergency rules requiring immediate premium audits with the thought that this would bring premium relief to troubled businesses. However, these rules mostly created confusion and added high administrative costs to both businesses and carriers. No one was prepared for the massive data collection and analysis effort that the states mandated.”
My Workers Comp Premium Auditor Job and Emergency Rules
After reading Mark’s great article on WorkCompCentral, the puzzle pieces came together.
Three different carriers contacted J&L Risk Management Consultants in late March/early April to consult on how to follow and comply with the changes in the premium audit rules in various states. As I am a nationwide consultant, the carriers wanted me to write up reports very quickly on how to comply with the emergency changes and to process refunds to the insureds.
Even more complex than the workers comp premium auditor job was the agents handling the multiple changes to the new emergency cancellation rules for non-payment of premium. Those changes made my head spin.
The Workers Comp premium auditor job that I was assigned by the three carriers became frustrating very quickly. The states changed the rules sometimes weekly by altering the last set of notices published with another set of rules.
By the time I had written the reports for the three carriers, they resembled the old saltine crackers in the back of the pantry. My reports were stale even after changing them a few times as I wrote the original drafts.
Rating Bureaus Made Workers Comp Premium Auditors’ Job Almost Impossible
The states were making quick changes to their Workers Comp rating rules. The rating bureaus such as NCCI and the WCIRB tried to keep up with the changes. If the premium auditors were using the rating bureau rules, the rules may have changed by the time the prior rule changes were published by the bureaus.
Even the definition of furloughed workers varied over time. No blame should be placed directly on the rating bureaus. They did the best that they could with what they had in front of them.
Some State And Rating Bureau Rules Had A Delayed Effect
Most workers comp insurance rating systems run 18 months behind to give the chance for claims development to occur on each workers compensation file.
Check out my article on the delay here. Yes, it is part of the workers comp framework.
As I covered in the article, many unknowledgeable workers comp pundits wanted to know the results of the pandemic immediately on workers comp. The system remains a delayed system that will not change – pandemic or not.
Interviews With Premium Auditors Today
My due diligence when talking about premium audit effects would be lacking if I did not interview a few premium auditors to get their take on what has occurred since March 2020. All three asked that I kept their names and companies anonymous. The main comments were:
- I only do premium audits for one state. My business has been slow lately. I will need to check the rules as I have a multi-state client audit coming up soon. (employer auditor)
- I am doing the best that I can do. My company issues different directives on how to proceed with premium audits for certain states. I follow those directives closely. Many times, I received updated directives in the middle of a premium audit that caused me to start the premium audit over – very frustrating. (independent auditor for employers and carriers).
- I have software that my company provided me with the supposed new changes. I know they are partially outdated, but it is the software I must use. I receive updates at least monthly. (independent auditor)
- The two very active auditors said the largest amount of confusion came when the departments of insurance ordered immediate refunds that defied the premium audit process framework. The refunds could have been rectified at the time of the audit.
As we can see in the three auditor’s comments, there exists an air of uncertainty. Uncertainty in any model causes more uncertainty as one progresses through that model – even the premium audit model.
Negative Effect on Employers
The workers comp premium auditor’s job was not the only one affected by the emergency rules. As Mark Walls pointed out in his article, not only were the insurance carriers under “emergency timeframes”, so were the affected employers. The quick and dirty emergency refund rules caused many complications with employers including:
- Immediate up-to-the-minute accounting for furloughed workers
- The same immediate accounting for home workers
- Immediate preparation of records for the worker’s comp premium audit.
- Accounting for the refunds into the worker’s comp budgets.
- Even more accounting confusion when the final policy premium audit was performed
The workers comp premium auditor’s job and the employer’s bookkeeping/accounting departments incurred a mound of new paperwork almost overnight. Now that we have been through one emergency, did we learn any lessons for the next time?
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