Final Audit Preparation – Reason #1,093

The California Workers Compensation Insurance Rating Bureau will not include estimated payrolls in an experience modification (ex mod) calculation. If a final audit is late the Bureau will process the worksheet without the payroll data for that policy period however they will include the claims.  Obviously this will wreak havoc on an ex mod depending upon the amount of actual payroll and claims developed.

Today’s example involves a client who put off the audit until a few months before their renewal.  The ex mod data (called unit statistical reports)  must be submitted by the carriers usually within seven months after expiration of the preceding policy.  Through our Work Comp Navigator program, one step is to identify or estimate the ex mod and check it when the actual calculation is done.  In this case the late final audit facilitated a 2010/11 ex mod that omitted all of the 2008/09 payroll data causing a 28 point increase!

Fortunately our Navigator  process allows us to catch and remediate this. In this case it means almost a $30,000 reduction in the client’s renewal premium!  A more expedient final audit would have eliminated this potential disaster.  I sometimes wonder how much money is overpaid in California workers compensation premiums due to situations like this that are not caught and personally would not rely on the Bureau or carrier simply due to the volume each processes.

Your comments, insights or questions are very welcome!