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.
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
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
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