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What is a premium audit?
A premium audit is a report of the findings from an examination
of the insured’s operation, records, and books of account
to determine the actual exposures for the workers’ compensation
insurance provided.
When is an audit necessary?
An audit is necessary after the expiration of a policy that has a variable
premium base. Workers’ compensation insurance premiums are based on
remuneration. Premium shall be computed on the basis of the total
remuneration paid or payable by the insured for services of individuals
who could receive workers’ compensation benefits for work-related
injuries as provided by the policy.
Why is an audit necessary?
An audit is necessary to determine the correct exposure or premium
base for the insurance coverage afforded. If necessary, an
adjustment will be made to the premium estimated when your policy was
issued.
Who will perform the audit?
If your policy requires a physical audit,
a CompSource Oklahoma Premium Auditor will contact you for an appointment after the
policy has expired or cancelled. The audit department will notify
you if the policy audit information can be furnished by mail.
The audit department forms will
explain documents required for this type of audit.
However, a physical audit may still be necessary if the documentation
is extensive or additional verification is required for completion.
How should my records be kept?
Often there are allowable credits according to insurance manual
classification and rating rules. The premium auditor will give you the
credits to which you are entitled only if your records provide the
necessary details. The premium for your workers’ compensation
insurance is based on payroll, or in other words, the total
remuneration provided for services performed by an employee,
an uninsured contractor or casual labor.
What is remuneration?
Remuneration means money or money substitutes, such as:
- Wages
- Payment for piece work
- Commissions
- Profit sharing plan
- Davis-Bacon wages paid to employees (must be qualified
under 401(a) and 501(a) of the Internal Revenue code
for exclusion)
- 401K and Cafeteria plan
- Bonuses
- Statutory payments
- Overtime pay
- Tool allowances
- Holiday pay
- Value of board, lodging
- Vacation pay
- Store certificates
- Sick pay
- Other substitutes for money
How to figure your overtime credit?
If you pay overtime you may exclude one third (time-and-a-half) of the gross overtime amount from
your premium basis. YOU MUST MAINTAIN RECORDS TO SHOW OVERTIME PAY SEPARATELY
BY EMPLOYEE.
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