Don't Leave Money on the Table

Unearned Premium

January 27, 2012

Workers' Compensation policies are auditable policies. The estimated payroll makes it auditable because the carrier bases the annual premium charge off the estimated payroll that is submitted to them.

When requesting the policy issued, the agent typically uses “if any” or $100 in estimated payroll, even when it is known there are no employees. This is done because there needs to be a minimum premium charge for the carrier.

After the policy period is over, the carrier will send out an audit looking for actual payroll. The audit letter is usually sent out about 2 weeks after the policy period has ended.

Most associations don’t have any employees, meaning most see a return premium check if they complete the audit. Associations not completing the audit are leaving money on the table and risking the carrier cancelling your coverage. 

An association simply needs to complete an audit and then the carrier will issue a check for the unearned premium. This usually amounts to $130-$150, depending on the carrier.  

Workers compensation carriers have audit departments that are available to assist with the process and other carriers offer online audits.  As always, MMA is always available to help as well.