KNOW YOUR RIGHTS
4 . INSURANCE CERTIFICATES 5 . ADDITIONAL BUSINESS INFORMATION
returns , fake insurance certificates , or incomplete financial reports ) could lead to prosecution by your state ’ s insurance department for insurance fraud .
As such , always check to confirm that your organization ’ s documentation is accurate and honest . In the case of telephone and in-person audits , be sure that a knowledgeable individual is available to answer any questions that the auditor might have .
AFTER THE AUDIT
Once the audit is completed , the auditor will send your organization a report detailing their findings — such as whether any classification rates need to be changed or whether the payroll estimate was correct . From there , you will know if your organization must pay more premium charges or will receive a premium refund . If you agree with the auditor ’ s findings , it ’ s best to take any necessary actions ( e . g ., paying extra charges or updating classification rates ) immediately .
On the other hand , if you disagree with the auditor ’ s report , you can file a dispute . Make sure you contact your insurance company directly for instructions on how to properly dispute a premium audit . Most insurers require you to send audit disputes in writing within a specified period of time , describe the problem in detail ( with adequate reasoning ), and suggest an alternative solution . The insurance company will then carefully review your dispute and determine whether an audit revision is necessary .
Typically , any obligation to pay extra premium expenses will be put on hold until the dispute is resolved . If your insurer does not address your dispute in the way you wanted , you can appeal their consensus to your state ’ s workers ’ compensation board . It ’ s best to consult legal counsel for further guidance in this scenario .
PAYGO POLICIES
To minimize the risk of having to pay large audit balances at the end of a policy period , some organizations opt for pay-asyou-go ( PAYGO ) workers ’ compensation policies . PAYGO policies allow organizations to pay their premium costs in real time rather than at the policy ’ s inception , with premium calculations based on actual payroll information .
Nevertheless , PAYGO policies do not excuse organizations from the premium audit process . Organizations with PAYGO policies must still have routine audits done to ensure their premium calculations are correct . However , the findings from premium audits tied to such policies usually result in fewer added expenses than those of traditional workers ’ compensation policies .
CLOSING THOUGHTS
Overall , it ’ s crucial for your organization to have a clear understanding of the premium audit process and how it can impact your workers ’ compensation costs . More than anything , make sure your organization is fully prepared for an audit . Never ignore an insurer ’ s audit request .
The majority of workers ’ compensation policies include a contractual obligation to allow an audit to take place for as long as three years after the policy ’ s expiration . Failure to comply could result in the termination or nonrenewal of your policy .
Contact us today at SpectrumInsGroup . com / contact for additional workers ’ compensation guidance and resources . +
This Work Comp Insights is not intended to be exhaustive nor should any discussion or opinions be construed as legal advice . Readers should contact legal counsel or an insurance professional for appropriate advice . © 2021 Zywave , Inc . All rights reserved .
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