Page 3 - SIB Whitepaper - Workers' Comp Audit

“The savings from taking such a proactive stance, especially if your operations extend into multiple states and involve many types of workers, can be enormous.”
information–frequentlyateamthatshouldbe focusing on much more mission-central work – and cases abound in which burdensome additional premiums have been owed long after a premium’s original policy year has nished.
There are steps you must take to ensure your rates remain as low as they can be while still adequately protecting your company. This fact is especially true if you have a complex payroll. Insurance auditors rst look to adjust your premium by placing your employees into hundreds of risk categories correlated with the work they perform. The maneuvering of even small sets of employees from one category to another can cause dramatic shifts in what you owe to insure them. Rationales for such decisions can be tenuous, to say the least. In one instance, a clerical worker was shifted to the same risk category as machine- oor workers because she walked past the machines they worked with on her way into and out of the building every day.
Such a dramatic misrepresentation highlights
both the pitfalls and the opportunities inherent in a workers’ comp insurance audit. You can easily fall victim to extreme, detrimental assessments of your workplace; and insurance companies litigate intensively to enforce their conclusions. But if you are adequately prepared, you can give yourself the tools to ensure that your policy is fair and accurate. The savings from taking such a proactive stance, especially if your operations extend into multiple states and involve many types of workers, can be enormous.
Consider the experience modi cation rate (EMR) – an actuarial tool that estimates the risk your operations pose to employees, usually based on your payroll and on three years of past incidents. Increasingly, this rate is signi cant or preeminent in determinations that lead to securing bids and contracts in competitive industries. In most states, an EMR is calculated and authorized by a not- for-profit bureau formed by the insurance industry, the NCCI (National Council on Compensation Insurance). But not in all states: many have their own ratings systems,
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WORKERS’ COMPENSATION AUDIT • © 2017 SIB FIXED COST REDUCTION