Workers Comp Premium Audit Error Rates Sometimes Overinflated
As in the period from 2008 – 2013, many websites that want clicks are stating that workers comp premium audit error rates exceed 70%. Of course, the website owners and article writers want to sensationalize the numbers to have insured employers click on the article or look more closely at their website.
In the previously mentioned period of 2008 – 2013, two different websites said the workers comp premium audit error rates exceeded 80%. Due to legalities, I will not link to those websites to show the examples.
After performing premium audits for employers that number in the 1000’s, we at J&L do not ascribe to sensationalism for clicks – better known as clickbait. To me, this erodes the reputation of the premium audit industry including the premium auditors for carriers.
No, the workers comp premium audit error rate does not approach 70%. Let us cover “why” very quickly.
Seeing is Believing
Let us look at the 80% number that one employer premium audit provider stated in their website and articles. As an old friend – Carlos – that unfortunately passed away in 202o said (and I remembered) – paraphrased –
Yes, the provider is looking at a slice of the pie, not the whole pie. The ones that the provider sees has already been screened by other parties including the insured itself or agent or other entities. The ones that the provider usually reviews does not constitute all the workers comp premium audits – only the ones with concerns or questions.
The provider sees only a certain set of premium audits, not the whole set of all the audits. I agree with Carlos’s statement.
If one reviews only 1% of the pie (and that is a big number) – their incoming business from employers’ premium audits, one cannot assume that 80% have errors. Now, I am hungry for leftover pumpkin pie.
True Workers Comp Premium Audit Error Rate
The true number that I have seen covers 33% to 50%. Hold on, though, would someone want to pursue an error of $250 on a $175,000 policy? That counts as an error in the inflated error rates for clickbait, but which company wants to question their carrier and agent over $250?
The Unknown Number
No one person or company knows the exact workers comp premium audit error rate that is large enough to justify a dispute with the carrier. My estimate would be 35%, not 80%.
The gut feeling of the owners, risk manager, or senior management always wins out. If you feel something is wrong, then it may be worth the effort to have your premium audit reviewed by someone.
