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Premium Audit Process Will Never Be The Same – Pandemic Effect


Workers Comp Premium Audit Process Changed Forever

Oh no – another pandemic effect article.  Yes, we have seen too many over the last 36 months.   Yet, I had to write this one as so many employers, other consultants, independent premium auditors, and other companies have contacted me about the changes to the premium audit process – namely the sharp reduction in the number of in-person audits versus the hybrid audit process.

How Do I Know About These Changes?

We have received a number of employers’ inquiries on video and hybrid premium audits that a trend started to appear over the last six months.  All the types of companies listed above had the same question on the sharp drop in in-person premium audits compared to the pre-pandemic levels.

A few employers wanted us to assist with getting their paperwork together for the audit.  We do not do any type of audit prep work as that can get an employer and J&L into a vat of hot water very quickly.  Some premium audit companies offer this service – why I do not know when one looks at this old story on a consultant that specialized in this type of work.

Advice To Employers On Hybrid Premium Audit Process

Yes, you do have to turn over any data records to the premium auditor upon request.  However, I am torn on not letting the information outside the employer’s location.  Demanding that the premium auditor do an in-person audit may not be the best way to complete the process.

Some states require onsite premium audits when the payroll or premium reaches a minimum level such as Florida or California.  Waivers were given in certain states.  Onsite premium audit waivers were given out in California and other states during the pandemic with good reason.

My advice, as with any audit, be it a tax, insurance, or other types of audit where a company wishes to examine your books goes like this:

Do not be the company that stands out by being non-compliant with whatever the premium audit company or insurance carrier premium auditor requests from you as long as it is not – for example – trade secrets.

Providing Too Many Spreadsheets

The one area that concerns me is for the premium auditor to ask for spreadsheet after spreadsheet.  I had thought this was the job of a workers comp premium auditor – to create their own spreadsheets from the data provided by the employer.   Requesting too many spreadsheets has been the subject of many emails from employers to J&L asking what to do.

The Answer – (Sort Of )

The best place to find what you have to turn over including spreadsheets is in every workers comp policy – the contract between the carrier and the insured.   The example language usually looks similar to this:

graphic of workers comp premium audit process rules
(c) Public Use License

The above passage is in your policy, and I cannot express enough that you or you assign someone to read your policy and every endorsement every year. If you have any of these on spreadsheets, then yes, you do need to provide the auditor with them. The storing and retrieving clause means that you cannot do a data dump.

There is nothing in that passage that says you have to procure many new spreadsheets – then again, do you want to be considered non-compliant during the premium audit process – a balancing act for sure? See the above-bolded passage.

Also Read: General Liability Insurance Premium Audits Definition



Premium Audits During Policy Period

Should Premium Audits Be Allowed During Policy Period? I received this question last week on premium audits. I know that an insurance carrier comes in

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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