Although in many circumstances the word audit has a negative connotation, in the workers’ compensation world, an audit is simply the process that determines the actual premium due for a policy period.
The premium paid at the beginning of a workers’ compensation policy period is based on estimated payroll and classification code information. Actual payroll records are needed to calculate the final premium, which is why they are needed for the audit. At Pinnacol, we audit every policy annually, at the end of each policy period, to ensure that the premium paid accurately reflects your business’s payroll and classification code.
Because audits are so prevalent in workers’ compensation policies, we get lots of questions about them. Here are some of the most common, along with their answers:
1. Does every audit result in a premium increase?
A policy audit doesn’t always determine an increase in premium; in many cases an audit actually results in a premium refund. The intent of the audit is to ensure that your premium is accurate; returning premium to our customers when it is owed is an important part of the audit process.
2. How do I know when my policy is up for an audit?
Audits take place toward the end of each policy period, and we will notify you when it’s time to perform your policy audit.
3. Can I do anything to prepare for my policy audit?
Yes, there are a couple of things you can do. To reduce any potential stress, we recommend that you collect the required documentation ahead of time. And instead of waiting for the annual audit, you can also notify Pinnacol throughout the year when your business experiences shifts in payroll. That way we can adjust your policy as changes take place, so you know what to expect down the road.
Read more about the policy audit types and required documentation, and start your audit process online. If you have other questions, our expert team of auditors is available to assist you at 303.361.4710.