From confusion to confidence: Master the workers comp audit

As an insurance agent, you know that a workers comp audit is a crucial part of ensuring accurate coverage for your small business clients.

During the audit, their insurance carrier will review your clients' payroll records and job classifications to determine the appropriate premium for their workers compensation policy. However, discussing this process with your clients can be daunting.

Check out the tips below to ensure your clients understand the importance of the audit, how the information will be used, and ultimately achieve accurate and cost-effective coverage.

1. Explain the purpose and process of the audit in simple terms.
   Let them know that the audit is conducted to verify the accuracy of their payroll records and job classifications, which are used to determine their workers comp premium. By demystifying the audit, you can alleviate any concerns or confusion they may have, building trust and confidence in your expertise.
   
   
2. Guide your clients on the necessary documentation and records required for the audit.
   Explain that the auditor will review their payroll records, including wages paid to employees in different job classifications. Emphasize the importance of maintaining accurate and detailed records to ensure a smooth audit process. Provide clear instructions to help them streamline the process and ensure they have all the required information readily available. While audits can be in person, they are usually done by mail, phone, or an online form.
   
   
3. Emphasize the importance of accurate reporting and regulation compliance.
   Explain that the audit is conducted to ensure your clients’ coverage aligns with their actual business operations and job classifications. By educating your clients on the potential consequences of inaccurate reporting, you can help them avoid penalties and ensure their coverage accurately reflects their business. Assuming the employees are classed appropriately, explain there are essentially three possible outcomes:
   • The projected payroll submitted was too low and they may owe money.
     
   • The projected payroll submitted was too high and they may get a credit.
   • The projected payroll was correct and they are good to go!
     
4. Discuss strategies to help your clients minimize their workers comp premiums.
   Explain that the audit provides an opportunity to review their job classifications and payroll records, which can impact their premium calculation. By analyzing their payroll classifications, experience modification factors, and safety programs, you can identify opportunities for cost savings and recommend appropriate adjustments to their coverage.
   
   
5. Offer your expertise and guidance
   Ensure they understand that you will work closely with them and the auditor to ensure a smooth and accurate audit. By providing exceptional customer service, you can strengthen your client relationships and position yourself as a trusted advisor.

Don't let the workers comp audit process intimidate your small business clients. By mastering the conversation, you can empower your clients to navigate this essential process with confidence and ease.