March 2, 2023

10 FAQs Regarding Workers' Comp Audits

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A premium audit is necessary for any workers’ compensation policy and serves an important function. Audits of workers’ comp policies are  important to confirm business operations and obtain documentation needed to ensure the policyholder is being charged fair and accurate.

Below are some of the common questions we receive regarding policy audits, with answers directly from our audit team members.

1. How do I schedule my workers' comp audit?

Typically, audits are not scheduled. Our team sends out audit requests with a due date for annual, cancellation, interim, and test audits. If a physical audit is needed, the auditor will coordinate with the policyholder to schedule an appropriate date and time. Annual audits can be done by mail, online, or physical audit depending on what it is scheduled for that year. Test and interim audits are typically set up as physical audits; therefore, the policyholder will be contacted by the auditor to schedule the audit.

2. Can I complete my workers' comp audit online?

Yes! If your audit is selected to be completed online, you will be notified via mail or email and receive a pin and passcode that is active until the due date of your audit. You will be able to log on to our secure website and complete your audit and upload the verification documents.  

3. What are the different types of workers' comp audits?

  • Annual Audits - These audits are performed every year for every policyholder. While they may be performed at different times, they are typically ordered shortly after the end of the policy period to obtain actual payroll, as this may vary from the estimate on which the premium was based.
  • Cancellation Audits - Cancellation audits are conducted upon policy cancellation to obtain actual payroll and to verify your business operations for the period your policy was in effect.
  • Interim Audits - If significant changes to payroll or business operations occur mid-term, an interim audit may be conducted to address these developments.
  • Test Audits -  When a new policy is issued, a test audit may be used to verify that information regarding payroll and business operations matches what was identified during the underwriting process.

4. What is the purpose of a premium audit? Why do I need a premium audit?

The purpose of a premium audit is to gather key information regarding business operations and payroll to ensure that the charged premium matches the needs of the business. If a company’s premium is too high or low, it may be adjusted based on the audit.  

5. When / how will I be notified of a premium audit?

Depending upon your policy’s premium size and class of business, audits may be performed annually, every other year, or as needed. Audits may be conducted physically at your place of business, virtually via our online portal, by telephone, or by mail. If your policy is selected for a physical audit, you will be contacted directly by your assigned auditor. If your audit is selected for mail or online, you will receive an email or a letter in the mail with instructions on how to complete your audit.  

6. What documents do I need to supply for my workers' comp audit?

The following documents will be needed in order to complete your audit:

  • Federal 941s and State Quarterly Wage Reports
  • Payroll Register (By employee)  
  • Most recently filed Business Tax Return  
  • 1099s & 1096  
  • Vendor Payment Report
  • Cash Disbursements Journal
  • Certificates of Insurance for each subcontractor (covering your entire policy period)  

If necessary, the auditor may request other records to complete your audit. To better assist, take advantage of this premium audit guide.  

7. What is a certificate of insurance?

A certificate of insurance (COI) is a document that shows that a business has workers’ compensation coverage. The COI will show the name of the business, the coverage dates, the policy number, the carrier providing coverage, the insurance agent for the business, and the name of the business receiving the certificate. COIs are commonly used for businesses that are subcontracting their services to another business.  

For more information on certificates of insurance, click here.

8. How far back does a workers’ comp audit go?

For your annual audit, your audit period is for the previous policy period. You will need to have records for the entire policy period.  

For a cancellation audit, we will audit the period of the policy that was in effect prior to the policy cancellation.  

9. What happens after my premium audit is complete?

After the audit is complete, you and your agent will receive a payroll audit statement outlining any premium changes that have occurred as a result of the audit. This is not a bill. You will be responsible for any additional premium charges once they are reflected on your invoice.

10. Can I appeal my workers' comp policy audit?

If you disagree with the findings of your audit, we encourage you to contact your agent to discuss. You can also file an audit dispute.  Notification of the audit dispute must be in writing and should provide specifics (e.g. payroll amounts, class code issues, etc.) of what is being disputed. It also important to remember that supporting documentation must be provided with the audit dispute. It is also important to remember that payment is expected on the undisputed portion of the audit.

 

LWCC is committed to providing best-in-class workers’ comp coverage to Louisiana businesses. Audits are a key component that supports our ability to carry out that mission. If you have additional questions regarding our audit process, we encourage you to explore our additional online audit resources or to contact us via phone or email.  

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Frequently asked questions

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