Workers Compensation Audits: What Brokers Need To Know
At Balance Point, we focus on what we’re good at, and that’s payroll, HR, and time and labor management. We’re not a big box payroll provider that’s going to try and sell you a blanket of services we aren’t experts in.
Balance Point signed an agreement stating that as long as we’re with ANE, we will not sell insurance. We don’t want to be insurance brokers, that’s your job, but we do want to be on the same team.
We want to help you, help your clients. If you’re not sure how we can help you make a difference, that’s okay, we’ve taken some time to explain how our services would be extremely beneficial for everyone!
Workers Compensation Audits – How Balance Point Reduces The Risk
If your client is paying workers compensation in a traditional sense, then at the end of the year a premium audit might be conducted to verify payroll, class codes, and sub-contractor exposure. A year-end final audit is really a verification of the exposure of a policyholder to determine the final premium to be charged since the original quote was based on estimated payroll only.
There are a few reasons why a business might be unhappy with this kind of workers comp insurance. First of all, if the original quote is estimated at the beginning of the year, the possibility of under or overpaying exists. To get a little cash back at the end of the year would be nice, but for those businesses who owe money, they won’t be so thrilled.
Business owners don’t like surprises. Having to owe money at the end of the year could catch some businesses by surprise causing a problem for their end of year budget planning. Especially for a new or small business, having to owe a few thousand dollars at the end of the year could really make or break their future planning.
Along with having an audit conducted, the proper paperwork is needed:
- Payroll Records
- Employee Records
- Payment and Cash Disbursement Records
- Certificates of Insurance
- Detailed Description of Your Business Operation
- Experience Modification Worksheets
Not only do audits require a ton of paperwork (and end up being very time consuming for everyone involved) there are also a number of risks to a business when an audit is conducted. Mistakes are often made that can be detrimental to a company. You may be thinking, “Well, mistakes happen, but how often do they really occur?” They happen quite frequently and are very common as you know.
Common Mistakes Made During Workers Compensation Audits Your Clients Should Be Aware Of:
- Auditor uses the wrong class codes for one or more employees.
- Auditor applies the wrong experience mod when calculating your audit premium.
- Workers compensation policy credits given by the carrier at the beginning of the policy are not showing up on audit.
- You are being charged for sub-contractor payments even though you have a valid certificate.
- The original manual rates quoted to you are not the same as the rates on the audit.
- Incorrect payroll figures are used on when calculating the audit.
- Owners and officer were not excluded from the audit when they were excluded on the policy.
- You had an employee in multiple workers compensation class codes but the payroll was not separated on the audit.
The solution? Pay As You Go Workers Compensation coverage.
There are so many benefits to Pay As You Go coverage. There’s no money down, the quote is determined by payroll reporting in REAL time, and there are no estimates. Businesses know what they are paying and there are no surprises. An audit still may occur but the risk is low.
Why ADP And Paychex Are NOT On Your Side
Companies like ADP and Paychex are a threat to you and your business. They are trying to be experts in areas they aren’t, but people see a “convenience factor” and don’t see the harm in giving them what should be your business.
The sales reps from big box companies are worried about the volume of sales and not the quality. Sales reps come in and “yes” you on everything you want to hear so it sounds like a no brainer and the sale goes through.
Somehow, the consult gets lost in the sauce and when their version of what YOU do best doesn’t work out, the sales guy loses the client’s number and they are left alone trying to sort things out.
However, we at Balance Point believe you SHOULD be experts in what you’re selling, and want to educate our clients as much as we can so they understand why our services are benefitting them. Our highly qualified team is always available to help our clients with the services they need.
How To Use Pay As You Go Coverage To Hook New Workers Comp Coverage
When you go into a prospect’s office you have the opportunity to ask them about their previous audits, cash flows, etc. and talk to them in depth about their concerns.
This sparks a positive conversation and gives the insurance broker the opportunity to talk about what they have to offer. Help educate your clients on how Pay As You Go coverage is a better option. Go over all of the risks audits could potentially have, and how Balance Point can help eliminate those worries.
Pay As You Go is just the beginning. Balance Point wants to help you gain long lasting relationships with clients and help you hook in prospects with the benefits of Pay As You Go, as well as our other great services.
Balance Point can also work with your TPA, handle HCR, and help you manage your employees with HRIS.
Singularity has always been our data sharing philosophy. We have the ability to keep everything you need to keep businesses running in one place, AND allow the experts to remain experts. Balance Point currently connects with 19 different carries, and will buld custom files with any carrier you chose.
How Balance Point Can Help You Retain Workers Compensation Clients
When you talk to your client about Pay As You Go coverage, it shows that you are looking out for your client’s best interest.
The more success stories you have, the more information you can share with prospects and clients to help keep good lines of communication open, building a trusting relationship, and retaining your business, KNOWING that you’re doing the best job (not all companies can say that).
Once you’ve educated your clients on the benefits they’re receiving, you’re able to gift them (and yourself) with one more thing….the gift of time.
All of the time wasted worrying about audits, paperwork, and mistakes vanishes and your client can go back to focusing on their business. You’re able to focus on other lines of work as well. Maybe you’d like to focus on cyber insurance, health, or property and casualty insurance.
Balance Point wants to allow you to be the expert where you are the expert, and we want to remain doing what we do best. Together, we’d be a killer team. We don’t want to step on anyone’s toes, we’d rather be on your team, working together to better serve our clients.
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