Page 4 - SIB Whitepaper - Workers' Comp Audit

“Insurers have many tools at their disposal to maximize their billing, most potently by misrepresenting your payroll and work environment, and, just as devastatingly, by using their immense resources to le suits for the payment of erroneously calculated premiums.”
and a slight adjustment – or even the various ratings bodies’ di erential responsiveness to correcting an error or oversight – can completely remake a rm’s prospects in a bidding industry. Utilizing discrepancies in the ratings produced by di erent rating bureaus in the various states where a rm’s operations take place can thus lead to drastic advantages – and, because the modi cation is also a multiplier directly tied to your premiums, drastic savings.
The EMR also exempli es obfuscation strategies that the insurance industry uses to take the audit process out of its policyholders’ control. The term’s usage is wide-ranging and varied; and another common phrase (experience modi cation factor or EMF) refers to an identical tool. Technical-seeming or disparate terminology can confuse and disempower a team if it is unequipped to parse it. Inform yourself before your audit begins, bringing on supportive external help when necessary.
THE ANNUAL AUDIT: WHAT IS THE INSURANCE COMPANY LOOKING FOR?
Insurers have many tools at their disposal to maximize their billing, most potently by misrepresenting your payroll and work environment, and, just as devastatingly, by using their immense resources to le suits for the payment of erroneously calculated premiums.
Your annual workers’ comp audit is, at face value, a standard procedure for the insurance company to ensure that the rates and coverage set forth in the original policy are still enough to protect your company and to protect themselves. However, insurance companies vary widely – and individual insurers vary from year to year – in the aggressiveness with which they seek to maximize their remuneration for already-expired policies. The auditor will dig into your HR records to analyze:
1. Payroll – does your reported payroll for the prior year match the estimated payroll used to generate the policy estimates? Have you grown or reduced your sta size, altered the compensation structure for your employees, or changed ownership or operations?
2. Class codes – are your employees properly classi ed into the job codes that match their roles? For example, is your administrative sta assigned to a lower risk class code than, say, your in-house maintenance department or equipment operator? The riskier the job role, the higher the premium will be for that particular class.
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WORKERS’ COMPENSATION AUDIT • © 2017 SIB FIXED COST REDUCTION