Insurance carriers conduct audits on the coverage provided during an insured’s payroll period. During the audit, the insurance carrier will review payroll and workers’ compensation class codes, among other items, to determine if the premium paid is accurate for the insured’s risk. The audit typically occurs after the policy has expired to determine if the premium paid during the policy period needs to be adjusted. The result of the audit could mean money back to the insured or a bill for money owed on a premium adjustment.
Preparing for the Audit
Although your insured may be aware of the audit, mistakes in the audit are all too common. Some of the most common repeat errors include:
Audit Issues
Preparing the proper documentation in advance of an audit can help your insured avoid issues with their audit. However, audits need to be completed within 60 days after the policy’s expiration. Because audits are time-sensitive, even a small paperwork problem could cause a delay in the audit and even result in the audit not being completed in time.
If an audit is not completed within the 60-day window, it’s possible that the insurance carrier would label your insured as “Non-Cooperative” which could result in the cancellation of a policy altogether. It is also possible that the insurance carrier will report the insured to the rating authority as “Non-Compliant,” which would make obtaining workers’ compensation insurance in the future incredibly difficult.
However, at PEO Insurance Brokers Network, we specialize in providing coverage to those companies that have experienced audit issues in the past. If you have an insured with past audit issues, we can help. Not only do we not hold past audit issues against you, but we don’t require you to go through the audit process — our programs are pay as you go.
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