Tag Archives: workers’ compensation classifications

Workers’ Compensation Insurers Routinely Misclassify Payroll

22 May

The California Workers’ Compensation Insurance Rating Bureau (WCIRB) is finding that workers’ compensation insurers are often assigning the wrong payroll classification to their policies. In a recent WCIRB report about the large risk validation program, where the WCIRB is testing policies larger than those covered by the regular test audits of the Bureau, 13.3% of the time the largest premium policies have the wrong payroll classifications in use.
Up to now, these large policies (usually with premiums of over $1 million per year or higher) have been exempt from the regular audit program of the WCIRB because the assumption has been that larger policies were more accurate than smaller ones. That turns out to be false. In fact, in audits of 219 large policies, the WCIRB found $1.9 billion in premium had been reported in the wrong classifications. That means that approximately one in seven workers’ compensation policies, big or small, have the wrong payroll classifications being applied.
Employers need to take notice of this error rate. There is a good chance that your policy has the wrong class codes being applied, and that the premium auditor who is billing you is making a mistake as well. When in doubt, ask someone to review your classifications and your premium audits. The money you save could be your own.
Don Dressler Consulting assists employers with workers’ compensation classification issues and premium audit matters. Just contact us by email at DonDressler1@hotmail.com for information or help.