Repeating Workers Comp Premium Audits – #1 Question Received

Repeating Workers Comp Premium Audits Now A Huge Concern – What To Do

Are carriers repeating workers comp premium audits from past years?  Every few months, we receive emails and calls inquiring about a certain subject.  When J&L sees a trend, we like to post info covering that question.  The other question we receive often is how to prepare for a premium audit.

The closest rule that covers repeating workers comp premium audits appears in your Workers Comp policy – which is:

California is the exception to the rule.  The premium audits can only go one year into the past.  The WCIRB (CA WC Rating Bureau) has basically eliminated repeating workers comp premium audits beyond one year. Change the above three years to one year for CA.

Reading The Policy

Many times when employers seek out assistance, the answer to the question can be found in your policy.  We have been told more often since the start of the pandemic that “we will have to find the policy” or we will have to request a copy from our agent.   Always have a copy of your policy and read all of it before you sign it.  Keep a copy handy at all times including copies of your old premium audits including the auditor workpapers.

Think of a workers comp policy or really any policy as an agreement/contract between your company and the insurance carrier.   The best time to speak up is when you receive the policy at renewal.  You should receive the policy at least two weeks before you are asked to sign off on what amounts to a full-year contract.  If you have to sign the policy at the last minute, that should be a yellow or red flag.

Two Ways To Look At Repeating Workers Comp Premium Audits

The best way to look at having to repeat premium audits is based on you the employer’s actions:

Cooperative and Accurate vs. Non-Cooperative vs. Inaccurate

Usually, after your workers comp policy expires, the premium auditor will send a letter requesting certain records be available for their physical premium audit.  The notification of the visit by the auditor will usually give an employer 3 –  4 weeks to prepare the requested records.

Cooperative – If the premium auditor was supplied with what was asked of you in the original premium audit including spreadsheets even during the pandemic Zoom hybrid audits, then one would have to heavily question why is there a need for (keyword) a re-audit of the preceding years.   If you had given the auditor everything that was requested, met with them on Zoom or any type of video platform, and were cooperative in your efforts each preceding policy year, then one would have to heavily question the need to dig up all the same records that were shown at the time of the original premium audit.

Uncooperative – If you did not supply the auditor with everything requested for the original audit (within reason), and withheld records after the auditor had made many requests, then that switches the audit from a “repeating workers comp premium audit” to finalizing the original audit.  Do not “stand out” by not providing the proper records on the first pass.

Inaccurate – In 2018, I attended a great Southeast Premium Auditors Association conference.  One of the presenters remarked that a red flag shows up quickly when the spreadsheets do not match the records. With any type of audit (including tax audits), being organized and having the numbers match will keep your company from standing out and starting a process that could include repeating workers comp premium audits for the last two to three years.  

If you feel that this article did not answer your questions or that you need assistance, please contact us using the Contact Us button or (800) 813-1386.

Also Read: General Liability Insurance Premium Audits Definition