Audits🧐

• Follow Agency Standards

• Reach out with 1 phone call, email and text; document with Labels.   

Pro Tip 💪🏼 Ask for their accountants' contact information to add to their file so that you can share audit requests or results with the accountant. It’s important to let the insured know getting their accountant or bookkeeper involved with the audit will lessen the amount of work for the client. We want to make the process as seamless as possible for the client. 

Here are the most common requested documents for an audit:

•  Payroll records (w2 employee specific)

•  Tax reports (Federal Payroll 940s or 941s)

•  General ledger, subcontractor ledgers and journal (or 1099s)

•  Certificates of insurance for subcontractors

•  Profit & Loss Statement

• Ignoring audit requests or delaying sharing with the client

• Failing to prepare necessary information and proactively support the client

• NOT using the management system - Omitting notes with adequate documentation or following the checklist.✍🏻

• NOT educating clients whenever possible about any premium variations or audit requirements

How to Read Audit WC How to Read Audit GLHow to read WC Audit

Understanding the Audit Results

• Compare the insured's audit form to the auditor's report, as the auditor's report may not always be 100% accurate. Ask for the audit exhibit report if the audit results are very high. They may not want to give it to you without the insured permission.

• If a business used a 1099 worker and provided proof of coverage from the sub to the carrier, they can avoid paying the premium on the payroll they cut to the 1099 worker.

• Sometimes it is possible to change or challenge a class code for an insured and a subcontractor. Videos change or challenge a class code Class Code Explainer

• Go over with the insured

  • Reach out to the client as a courtesy 1 time to go over the audit and see if they would like to either complete or dispute the audit. Manually add the 'Audit Dispute' label if they want to dispute🏷️

    1. Confirm the audit is accurate and the customer agrees and understands it. One way to explain it is that their business is growing and that the insurance rate did not increase.

    2. If the audit was not completed and they were levied a non compliance surcharge let the client know it's in their best interest to complete the audit to avoid cancellation or non-renewal. Check What Ifs

       1. 1. 1. • Email the client the audit request doc in your email summary (include the FAQ video about Audits). Provide the client and accountant the auditor’s or audit department’s email and phone number. Follow up with them 1 time to get the audit completed and close out. 

If they do:

1. Get with the insured and confirm the payroll/sales in the current term so they do not end up in a hole again with huge audit spikes. Some carriers may need proof for lowering payroll or sales (tax/payroll documents). Offer Pay as You Go!

2. Let the carrier know of the accurate payroll/class codes. Does the insured want to endorse the policy to reverse it or increase it?

If they don't:

1. Get with the insured and confirm the payroll/sales in the current term so they do not end up in a hole again with huge audit spikes. Some carriers may need proof for lowering payroll or sales (tax/payroll documents) Offer Pay as You Go!

2. Once you confirm that, tell the carrier to endorse it or leave as is. 

Direct Bill

1. If we are not disputing the audit or helping them complete the audit, then we will let the carrier bill insured. Some carriers offer payment plans on the audit. Go ahead and do this.

2.  Insured pays the carrier the premium in full unless they request installments. We provide the insured the invoice from the carrier to pay.

Agency Bill

1. If we are not disputing the audit or helping them complete the audit, then we will have an accounting invoice insured through EZ.

2. It is important to confirm the audit period or term.

3. We cannot finance an audit, but we need to confirm will there be an endorsement for the current term?

4. We can finance the endorsement on the current term, not the prior audit.

5. Either way, it will need to be paid.

6. We create separate PFA in ascend for insured and make the program pay in full option only. (To make a program paid in full only, you need to set the Minimum Earned Rate to 100% on all policies when creating the PFA for that specific program. This ensures that clients will only see the pay-in-full option during checkout, and premium financing options will not be available.) If the insured is requesting installments we need to contact the carrier and request installments to be provided and the billing options they can offer.

• MGA Johnson & Johnson General Liability audits are direct bill and are to be paid by the insured to J&J accounting department directly.

This is the section where we outline all of the hairball, wonky things that can happen so we have a Plan B ready to go. 😱

Here are some options for the what if situations that may arise. We want to empower you with a plan rather than having to scramble. 💪

🤔 What if the client hasn't completed his tax returns for the year? 

• Ask the carrier if the current P&L statement will suffice in place of the tax returns. 🧐

🤔 What if the client doesn't complete the audit?

• It may be because they do not understand it or are intimidated by it  We have a lot of new businesses and its our role to educate them. Always check can we get accountant’s information or bookkeeper companies info and add it to the management system under contacts or details page? CC them on all correspondence

🤔 What if the client wants to dispute the audit?

• If no audit was done: Ask the carrier to pause billing until the insured can complete an audit form. Remind the insured that not all carriers will pause the billing and they should continue paying to avoid cancellation and/or nonrenewal due to the audit not being completed. 

• If audit was done:

  • Review the audit and discuss areas of dispute with the insured.

  • Ask the carrier to pause billing and request the audit dispute form and original audit documentation.

  • Compare the insured's submitted data with the auditor's report; check for errors and potential class code challenges.

  • Send the Audit Dispute email template to client and follow the steps in the original process.

🤔What if the client doesn't provide all the documentation? 

• The best thing to do is advise the client failure to follow the audit can interrupt coverage even if the audit was for the previous term. Typically you will see the client start to respond if they know it will stop their day to day operations. Remind them that if an audit is not completed the carrier can add an audit non-compliance surcharge (usually 50% of what they are paying) on top of their policy for not completing the policy. They would remove this once the audit is done. ⏰

• Remember the clients that are going through an audit are also running businesses! The best thing would be to get their accountant or payroll provider involved to help make the audit process as seamless as possible. 🤝

🤔 What if you are unsure and not clear on what items are needed? 

• Always get the carrier involved and or provide the carrier's information to the accountant or payroll provider to reach out to the carrier directly. Make sure they have the policy number to reference. ✅

🤔 How far along do we have to go on the audit not completed process, until we confirm that the insured is aware of the audit, or once the insured has sent the audit information to the carrier, or when the carrier has received the information and gets us the audit results? 

• Just follow up one more time to complete the audit ⌛️ then close 🔐 out

🤔 What if the audit results are not ready by the time we FU? Do we just ask them to send them when ready and we close the task or wait until they have them?

• If the insured is complying with the audit then follow up with the carrier until it is done

🤔 What if an audit WF is already closed because the insured did not answer, but the carrier sends correspondence to advise it has not been completed and the WF is reopened, how many times do we need to follow up?

• Do not follow up

🤔 What if the insured already tried to contact their Auditor and we have as well, however, they are being unresponsive. This has happened to me a few times. They closed the Audit and then reopened it again, going back and forth a few times. Should we report this to the carrier or someone?

• Let the team lead know 

🤔 What if the insured is in collections?  

This is necessary, especially for Worker's Compensation policies to reapply for coverage to the NJ crib. Also, it applies to remove non-renewals or cancellations on general liability policies for failure to comply.

• • • If the audit was completed and it is in collections, we need to verify if the audit information was indeed correct if the insured feels like it was not then go ahead and follow the audit dispute steps above. Check how to read an audit below and if everything is correct then let insured know we can get a payment plan to get compliant and out of collections to reapply for coverage.

    • If the audit was not completed and is in collections, we need to open it again and have the insured comply. In this case, I would follow the audit not completed estimated audit  steps above.

🤔 What if the customer does not reply?

• At your discretion and depending on the severity of the concern use Postal Mail

🤔 What if the contact information is wrong?

• Use Postal Mail and send the Bad contact memo. 

🤔 What if the client does not respond, how many times should I follow up?  

• Reach out with an email, text, and call and let the client know upfront; document with Labels.  Let the carrier know in writing or over the phone the fact that the insured is not responding. Close out and let the carrier know.

• At your discretion and depending on the severity of the concern use Postal Mail 

🤔 What if the carrier is unresponsive?

• Let your team lead know.

Email Templates

• Audit>Audit Dispute- Manual template

• Audit Non compliance template- Email and text this