What is a Workers’ Compensation Audit?
When purchasing Workers’ Compensation insurance, it’s important for employers to learn about certain maintenance and administrative issues, like audits. So, what exactly are Workers’ Compensation audits, and do you have to deal with them?
A Workers’ Compensation audit is a regular assessment of a company’s insurance premiums, payroll, and risk factors. Insurance carriers often use these audits to determine if an employer has paid the right amount in premiums over the past year and adjust premiums for the coming year. Unfortunately, some carriers might use Workers’ Compensation audits to increase premiums. These complicated audits are often time-consuming and may not end favorably for employers. To avoid arduous audits, consider purchasing a pay-as-you-go policy. Instead of using broad estimates to calculate future premiums, insurance carriers can use real-time changes to payroll to adjust the cost of your Workers’ Compensation premiums properly.
At NPN Brokers, we’re dedicated to helping companies get the Workers’ Compensation insurance they need to stay protected. To learn more about the Workers’ Compensation insurance brokers at NPN Brokers, call today at (866) 340-9120.
What is a Workers’ Compensation Audit?
A Workers’ Compensation audit is an annual review of a company’s payroll and insurance premiums carried out by its insurance carrier. Insurance carriers use these yearly audits to ensure policies are priced correctly and that employers have paid the appropriate amount in Workers’ Compensation premiums.
Many Workers’ Compensation insurance carriers require annual or biannual audits. To better understand what an audit might mean for your business’s future premiums, speak with our Workers’ Compensation insurance brokers.
Insurance carriers conduct Workers’ Compensation audits to ensure that everything lines up. When performing an audit, a carrier might request access to various records and information, like payroll, industry classification, and any other details that might impact the cost of premiums. Suppose your information doesn’t match with a carrier’s or illuminates discrepancies in what you’ve paid for Workers’ Compensation insurance over the past year. In that case, your carrier may want to settle up.
Insurance carriers might also use a Workers’ Compensation audit to assess how your policy and premiums should change in the coming year. Workplace accidents, settled claims with injured employees, changes in payroll, and other factors might influence whether or not a Workers’ Compensation insurance carrier wishes to increase your premiums.
Generally, it’s carriers, not employers, that benefit from Workers’ Compensation insurance audits. Taking the necessary time to prepare for an audit, whether it takes place in person, by mail, or by phone, can be challenging for employers with larger workloads. Unfortunately, Workers’ Compensation audits might be inevitable, depending on your carrier. That said, some carriers offer alternatives to lengthy and confusing annual audits that might be better suited to your business’s needs.
What Can Happen During and After a Workers’ Compensation Audit?
If your current Workers’ Compensation insurance carrier requires frequent, lengthy audits, the process might be taxing. Not only may you be required to hand over ample information and documents during an audit, but the aftermath might be equally as frustrating. Audit season might be used as an opportunity to increase premiums and impose penalties depending on your Workers’ Compensation carrier.
Workers’ Compensation insurance policies are complex. Without our experienced Florida Workers’ Compensation insurance brokers by their side, employers might have difficulty understanding the ins and outs of their policies, creating an opportunity for discrepancy during an audit.
Miscommunication and other issues might confuse employers during audits, resulting in employee classification and payroll errors. As many annual or biannual audits depend on estimating a company’s payroll and risk factors, an audit’s findings might be based on unreliable estimations that don’t accurately reflect appropriate premiums.
Now, you might think that things will even out. If estimations for last year’s audit were off, hopefully you’ll get a refund on overpaid premiums when next year’s audit comes around. That’s not necessarily the case, as some carriers aren’t eager to refund employers for overpaid premiums. Instead, the next audit might uncover new risk factors that increase your premiums.
While often mandatory for carriers, Workers’ Compensation audits do not always end favorably for employers. Though you might be able to appeal an audit’s findings, there’s no guarantee that doing so will be successful.
How to Avoid an Annual Workers’ Compensation Audit
Annual or biannual Workers’ Compensation audits can be lengthy and arduous for employers. They rely on estimations and expectations to determine next year’s premiums, not real-time changes that may more accurately reflect the appropriate cost of premiums for your business. To avoid unsuccessful audits altogether, companies can partner with our Workers’ Compensation insurance brokers and get a pay-as-you-go policy.
Annual Workers’ Compensation audits can seem unfair, especially to businesses with constant changes in payroll and frequent job differentiation. Companies can get pay-as-you-go Workers’ Compensation insurance to avoid these cumbersome audits.
Instead of adjusting premiums yearly based on expectations, your premiums can adjust in real-time as payroll changes and other risk factors occur. This type of coverage is often ideal for businesses with smaller payrolls or frequent changes to the number of workers they employ.
In addition to getting pay-as-you-go Workers’ Compensation insurance, companies can partner with our brokers, who have relationships with carriers that don’t require audits, contracts, or deposits. This allows for increased flexibility, which might not be possible with other Workers’ Compensation insurance policies. If you want to prevent complicated audits from negatively affecting your Workers’ Compensation premiums, partnering with the right brokers is often the first step.
Call Our Brokers to Get Workers’ Compensation Insurance Today
Getting Workers’ Compensation insurance coverage is important to keep your company protected. To learn more about the Workers’ Compensation insurance brokers at NPN Brokers, call today at (866) 340-9120.
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