WORKERS ' COMPENSATION amount of your workers ’ compensation premium .
Each of your employees is assigned a classification code based on their job description . The employee classification code applies a rate to their wages based on the risk associated with the type of work they ’ re doing . The rate translates to the amount your organization pays for every $ 100 in wages . The higher risk the job duties are , the higher the associated rate will be . At the end of the policy , the auditor will assess your payroll classes to ensure the class they were assigned at the beginning of the period is appropriate for the work they performed throughout the policy period . This may particularly affect employees who work in multiple positions . The highest-rated job class an employee worked in is the position they will be assigned a classification code for .
When you pay your premiums up front , it can be difficult to estimate your payroll for the year . The auditor will compare your estimated figure with the actual payroll reported and adjust your premium accordingly . To avoid paying a high lump sum at this time , you may work with your GIS Advisor throughout the year to adjust your premiums as soon as you become aware your payroll will be higher than estimated . Likewise , you may work with your GIS Advisor to request a rebate and / or a lower premium when your payroll is lower than expected .
The experience modification factor — or mod factor — is calculated using your loss and payroll data from the prior three years , excluding the most recent year . From there , your organization is compared to the industry average and assigned a factor based on your standing . If you have a mod factor less than one , you ’ ll receive a discount on your premiums . If you have a mod factor greater than one , you ’ ll pay a surcharge .
HOW TO PREPARE FOR YOUR AUDIT
Work with your GIS Advisor at the beginning of the period to make sure that all of your employees are classified correctly . This will prevent them from being switched to a more expensive class code at the end of the year , resulting in you having to pay a higher premium than expected . You should also check in with your Advisor regularly as your business changes throughout the year to ensure job duties and payroll are still being reported accurately . In order to best assist in the audit process , let us know when you ’ ve been notified your audit is approaching .
Going into your audit , make sure you have a detailed , organized record of your tax information , payment and payroll records , and employee information . You may also be asked to produce your insurance certificates and additional business information like your general ledger , sales journal , cash receipts , sales tax records , mod factor worksheet , a detailed summary of business operations , and information on each of your organization ’ s owners and partners . Ask your Advisor for a complete checklist of the documents you should have on hand .
We can ’ t stress enough that you need to complete your audit . If it is a requirement on your policy and you do not complete your audit , your insurance carrier will estimate the figures for you . Typically , these figures are not in your favor and will result in premium increases that could have been avoided had actual figures been used . If you need help completing your audit , we are always more than happy to help .
WHAT TO DO AFTER YOUR AUDIT
Once your audit is completed , the auditor will provide you with a report detailing their findings . The report will let you know whether you owe more in premiums or if you ’ re entitled to a refund , and why . We strongly encourage you to review this report with your GIS Advisor and relate to us if you have any questions or concerns . If you don ’ t agree with something in your audit report , we will gladly work with your insurance carrier to try and correct the audit and have your premiums adjusted to the appropriate amount .
WORK WITH GIS TO GET AHEAD OF THE GAME
We ’ re here to make sure your workers ’ compensation premium audit goes as smoothly as possible for you each year . We want to work closely with you to help you keep accurate records and report changes as they happen so you don ’ t get hit with any surprises when it comes time to renew your policy . As a workers ’ compensation expert , I invite you to contact me directly if you have any questions related to your policy or would like to get started with your audit preparation now . If you would like to get in touch , contact me at awilliams @ genins . com or 219-510- 6200 .+
BY : ALISON WILLIAMS BUSINESS RISK ADVISOR , GENERAL INSURANCE SERVICES
Alison Williams was born and raised in Chesterton . She attended Indiana University earning her Bachelor ’ s degree . Prior to joining GIS in 2016 Alison spent nearly 10 years in banking helping clients with banking , investments , business and loans . Alison lives in Chesterton . has a son attending Indiana University Bloomington , and is an active volunteer in the community . She has been a member of the Chesterton-Porter Rotary Club and a Duneland Chamber Ambassador since 2016 and a volunteer with Porter County Court Appointed Special Advocates ( CASA ) since 2015 . In Alison ’ s spare time she enjoys spending time with friends and family , beach days and musical performances .
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