Workers’ Compensation 101

Workers' compensation insurance hero

Question 9

Is there an audit process for workers’ compensation policies?

Yes! Most states require insurance carriers to conduct an end-of-policy (“annual”) audit via a physical visit to a company’s premises, over the phone or by mail. In some states, a physical audit may be required due to select premium sizes and industries.


Audit Process

The prime reason for the audit is to help insurance companies set proper rates. Comparing actual premiums based on actual payrolls – combined with total actual claims paid – helps identify a true loss ratio on which future rates can be set.

  1. The final workers’ compensation premium reflects actual payroll attributed to specific classifications over the period of the policy

  2. If your premium was too low, you owe additional premium

  3. If the paid premium was too high, the carrier returns the difference

  4. Audits usually take place between 30 and 45 days after the policy expires for a given year

Special Tip!

Conduct your own policy audit during the policy period and before the insurance company does theirs. This will help you identify all credits that are due to your company and any job classification errors that could adjust your premium.

Next Question: What about claims and risk management?

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