I Got an Audit On My Worker's Comp Policy - Now What?
Your workers compensation insurance policy just expired and now it’s time for an audit. The goal of the audit is to make sure your estimated exposures (payroll and uninsured contractors) matches your actual exposures. Below is a guide to preparing for an upcoming audit. The goal is to make sure you don’t end up paying a premium that’s any higher than it should be.
Before the audit
1. Assign a primary contact for the auditor who will see the project through to completion and who understands the workers compensation audit process. 2. Have the primary contact review any of your historical audit information. 3. Review the policy to see how the premium estimate was calculated. 4. Check your website and any other publically available materials the auditor may be reviewing in advance of your meeting to be sure the information is accurate. 5. Make sure your payroll documents include breakouts for overtime pay. 6. Be sure to have on file workers’ compensation insurance certificates from any 1099 employees. 7. This is an important one if you’re in the construction industry: Be sure payroll records accurately show an employee’s time spent in each workplace classification. If this isn’t accurately recorded, the employee’s payroll will default to the most expensive classification. Surely, you don’t want that!
During the audit
1. Have a comfy and well-lit place for your auditor to work. 2. Ideally, your auditor will work on your premises so he can ask questions. If that isn’t possible, be sure there is a knowledgeable person on your team readily available by phone and email. 3. If the auditor asks for information that may not seem relevant to you, like tax filings or tax returns, try not to get defensive. The insurance company has the right to ask for this information and if you are acting shady, they will want to do even more digging. Be cool, man.
After the audit
1. Ask for a copy of the auditor’s worksheets. Be aware that they will contain sensitive financial information, so be selective about who is to receive the documents on your organization’s end. 2. Review the audit billing statement, compare to the original policy and look for the following: ▪ Typically, the experience modification factor should not have increased. ▪ Classification codes should not have changed unless your company made a change in its operations. Note: the construction industry may be an exception to this rule. ▪ The Schedule Credit or Debit should not have changed.
Sometimes the results from an audit can be dramatically different from what you expected, but these steps should help you avoid mistakes during the audit process. If you want to know more about what to expect, send us your questions to firstname.lastname@example.org or give us a call 858-771-9590. We will happily field your workers compensation inquiries.