AUDITS

"Proudly serving employers since 1991"

Premiums & Experience Modification Factors

Audit your Safety Programs regularly for 1) Compliance 2) Effectiveness and 3) Documentation. Are you in the High Hazard Industry List this year?

Compliance means that someone in the company is making sure that regulations that pertain to your business are up to date in the Safety Programs and that employees have been properly informed and trained to these new regulations.

Effectiveness means that the management and representatives of crews/staff are meeting frequently to discuss the Safety Programs.  We always recommend having a Safety Committee that should meet at a minimum once every month.

Documentation is mandatory for any part of the Programs: Meetings, Training, Disciplinary Actions, Procedures, Investigations, New Employees, Regular Monitoring (noise, air, etc.).  The lack of proper documentation could be a problem with OSHA and the District Attorney in the event of a serious work-related injury, or fatality.

All payroll is reportable but not all is chargeable to Workers' Compensation premiums.  It is the responsibility of an employer to prepare the payroll details for an auditor.  When in doubt, an auditor may be required to assign the payroll to the highest rated classification, potentially costing unnecessary additional premiums.  For the construction trades performing OCIP projects, or wrap-ups, it is important to monitor the payroll reported to these projects and the audits by the OCIP carriers. Also, Classification Codes are used to allocate payroll and pay premiums based on the exposure. Classification Codes must be audited regularly so the employer does not overpay premiums by reporting employees in the wrong Code.  Lastly, the wrong allocation of payroll in Classification Codes influences the result of an Experience Modification Factor.

Insurance carriers pay expenses on claims and assign "reserves" for future costs.  It is the responsibility of an employer to monitor these expenses and reserves.  Insurance carriers report all claims to the rating organization of their state (WCIRB) to provide the data to calculate the Experience Modification Factor of the employer.  Carriers often fail to report certain situations such as Joint-Coverage, Subrogation and Non-Compensable and consequently produce an inflated Experience Modification Factor, causing an employer to overpay premiums. How well do you know your company's Experience Modification history?

Experience Modification Factors affect premiums (EXAMPLE). Up until recently, an Experience Modification Factor at 125% or above would cause an employer to receive an assessment from CalOSHA to fund the Target Assessment Inspection Fund. That employer would become target for inspections from CalOSHA. In Construction, this factor can affect the ability to compete or work.