Getting Ready for an Annual Work Comp Audit

Your company’s actual workers’ comp premium is calculated from the annual workers’ comp audit conducted by the carrier. Your premium can vary drastically from the estimated premium used to create the original policy.

To expedite the process, assign one person as the sole contact for the auditor. This can avoid miscommunication. Select a person who is intimately acquainted with all departments and workers, as well as the payroll records.

Have info about the particular job duties performed by a certain department or by individual employees handy.

Try to expect all questions to gain an advantage and ensure that you can offer correct details to the auditor. You do not want the auditor to make any assumptions because he will inevitably select the workers’ comp codes that will definitely be more favorable to the workers’ comp insurance company.

Request the work papers for the previous year’s audit for the contact person to look over with your previous years audit billing statements. This will refresh his recollection from the previous audit or show him or her the kinds of infothings the auditor is looking for). Either way, it’s a good preparation tool, sort of like studying for a test.

Make sure that your payroll records obviously designate which hours were paid as overtime so that he does not confuse that pay with straight hourly salary. If your company uses sub-contractors or independent contractors, ensure you have explanation that they have their own workers’ comp insurance. Without that evidence, your rates will likely go up, as you could be liable for their added risk exposure.

If you use a temp agency, those employees are the responsibility of the agency and should be covered by the agency’s workers’ comp policy. Confirm your records and clearly differentiate between employees, contracted temp employees, and independent contractors.

If you are in the construction industry, or a similar industry, don’t forget that you may use multiple workers’ comp job codes and allot one employee multiple classification codes. Paperwork must show the particular hours employees spent in each one of the different workplace exposures. If not, every employee will be placed into the most expensive class code possible.

The bottom line is you need to understand how the insurance companies operate. Their goal is to charge you as much as possible with out losing your business. Another thing you need to remember is that they constantly make mistakes and you must be on the look out for them.

If you’re not completely ready or you’re unfamilar with the system, talk to a specialist or start reading up on your workers’ comp knowledge. It will likely mean the difference between saving and spending a lot of money.

It is a lot to remember. Look into hiring a private auditing company to help get ready for your annual workers’ comp audit.

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