Audits

Workers Compensation Premium Audits

Audits Can Be Costly.  Lets face it, an adverse audit can be very costly.  It can result in significant increases in an insured’s annual premium.  In addition, unless the insured can show the audit is wrong, the increased premium from the audit must be paid.  Audits are almost always permitted under workers compensation policies.  Moreover, insurers routinely audit policies, particularly larger policies. 

Why You Should Consider Us: - Because We Literally Wrote the Book on These Issues.  

Yes, you could say we wrote the book:

  • On audits;
  • On the Classification System (class code);
  • On the Experience Mod System;
    (or the e-mod; or the experience modification factor);
  • On the formula for High Deductibles;
  • On the definition of “Payroll” for purposes of calculating premium;
  • On all PEO workers comp issues, such as proper corporate combinations for e-mod calculations;
  • On the formula for Retros;
  • On the formula for schedule rating.

Because we did.  And all of these items drive the final calculation of your workers' comp premium.  

Why You Should Consider Us:  We Know This Stuff. 

After all, during our years at the National Council on Compensation Insurance (NCCI), that was precisely our job.  NCCI set the rules of the road for audits; the Classification System; for the calculation of e-mods and High Deductibles and Retros and schedule rating.  And while at NCCI, we wrote the rules of the road for PEOs as to workers' compensation. 

Together with our staff:

  • We oversaw all the rules that are applied to audits;
  • We wrote the descriptions for the 600+ Classifications in the Scopes Manual;
  • We wrote and implemented the U.S. e-mod system; including its formulas;
  • We created and implemented the complex formulas for High Deductibles;
  • We authored and implemented the definition of “Payroll”;
  • For PEOs, we wrote the rules for corporate combinations for their e-mods; and most of the other rules that effect PEO premium;
  • We created and implemented the complex formulas for Retros;
  • We created and implemented the complex formulas for Scheduled Ratings;
  • We wrote the definition of “Payroll” for determining workers compensation premium;
  • We authored and filed some 500 statewide rate filings used throughout much of the U.S., setting the premium levels on about $15 billion of workers compensation premium – every year;
  • We gained regulatory approval to use all of the above formulas and rules.

Earlier in his career, as Iowa Commissioner of Insurance, Bill Hager judged each of these matters and approved or modified the rules as submitted to the Department of Insurance. 

We Know Audits.  Every one of the above issues can easily find its way into audit conclusions.  Conclusions that result in significant increases in premium.  We know workers compensation audits.  In addition, we know when their conclusions are right and we know when their conclusions are wrong. Moreover, we know what to do about it.  We have the firepower to address your audit issues.  Sometimes insurance company audit conclusions are not fully supported.  Sometimes the audit conclusions arrive at the policyholder’s doorstep in the form of a demand for additional premium, as opposed to a clear statement of the audit findings and an unambiguous calculation as to how the insurer arrived at the additional premium owing.

Audits Focus in on Cost Drivers.  An audit is not a walk in the park.  Audits almost always key in on the key cost drivers of premium, such as (i) classifications and misclassification issues (with significant premium dollars at stake); (ii) allegations of improper corporate combinations, resulting in a change in the e-mod (with more premium owing); (iii) independent contractors versus employees; and (iv) payroll discrepancies (with significant premium dollars at stake). 

We Can Help.  This is where we may be able to be of help.  Sometimes insurance company audit conclusions are not fully supported.  Sometimes the audit conclusions arrive at the policyholder’s doorstep in the form of a demand for additional premium, as opposed to a clear statement of the audit findings and an unambiguous calculation as to how the insurer arrived at the additional premium owing.

What We Do: Step One: Key Conclusions and Needed Documents.  First, we will scrutinize the audit conclusions in depth.  If they have not been provided, we will extract all of the key documents from the insurance company that they used and relied on in their audit. 

What We Do: Step Two: Careful Analysis.  Then we will carefully and intensely analyze the audit for mistakes, if any.  We will examine insurer conclusions as to all of the issues addresses in their report, including e-mods, class codes, retros, large deductibles premiums, corporate combinations (that effect e-mods) and whether the workers compensation premium was rightfully calculated. In addition, audits sometimes raise additional issues like (i) elements to be included in payroll, (ii) employee count and (iii) independent contractors issues (versus employees).

What We Do: Step Three: We Will Drive Your Corrected Audit Results Home.  Finally we will calculate the correct premium adjustment (or refund) based on the information available in the audit.  We will insist on having the insurer adopt our conclusions as to audit.  Please contact Bill Hager at 561-306-5072 or bhager@expertinsurancewitness.com for more information. 


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