Workers Compensation Premium Audit Noncompliance Charge
December 23, 2016
Carriers have been using a variety of methods to encourage cooperation from insureds who were uncooperative with premium audit. Generally, carriers surcharged the payrolls to generate an additional premium high enough to influence an insured to provide the actual exposures. NCCI thought it best to standardize how carriers approach uncooperative insureds and filed a new countrywide Audit Noncompliance Charge.
The Audit Noncompliance Charge endorsement (WC 00 0424) and accompanying rule provide a formal process for this situation. The rule allows a surcharge of up to 200% of the annual premium be applied to the audit if an insured is uncooperative, but premium auditors will use judgement in deciding the amount of the surcharge. The rule requires that the surcharge be refunded if an insured has paid the surcharge, but then cooperates on the audit.
This form will attach to new and renewal policies effective January 1, 2017, but the Audit Noncompliance Charge won’t be applied until such policy is audited and the insured is foundto be uncooperative.