As you know, your workers' comp and general liability final premiums are determined, not at the inception of the policy, but after expiration and audit.

Our AuditRate Division assists businesses to make sure premiums are determined correctly, per the rules set out in the manuals of insurance. Proper management of the audit process can avoid excess premium payments. While audit errors may or may not be refundable, it is certainly more prudent to prevent possible overpayments, rather than attempt to recover them. We offer the following suggestions in preparation for the audit of your policies:

1. Perform an analysis of your payroll journals/records to identify the proper classification of employees for Workers' Compensation premium determination. This should be conducted by a knowledgeable person to be certain that the department breakdowns shown in your payroll records do not mix clerical office people, salespersons, and drivers with operations people. If so, steps should be taken to properly segregate those exposures to the correct insurance classifications.

2. The premium portion of overtime should be deducted from the gross payroll totals.

3. For Workers' Compensation, officers' 2003 remuneration should be limited to $2,600 per week worked, or $135,200 annually.

4. Dismissal or Severance payments except for time worked or accrued vacation should be deducted from the payroll totals.

5. Third party sick pay should be deducted from the payroll totals.

6. Amounts paid for automobile allowances should be deducted from payroll totals.

7. Foreign sales should be determined and excluded from General Liability and Umbrella sales exposure base where applicable foreign coverage exists.

8. Inter-department/inter-company sales should be handled in a special manner. Please discuss with us.

9. Credits for products returned, allowances for damaged, spoiled goods, and repossessed merchandise should be determined, and deducted from the General Liability and Umbrella sales base.

10. Freight charges on sales , if freight is charged as a separate item on customers' invoice , should be deducted from the General Liability and Umbrella sales base.

11. Sales or excise taxes collected and submitted to a governmental division should be deducted from the General Liability and Umbrella sales base.
12. Ask the insurance auditor to forward a copy of their workpapers to your attention under Personnel & Confidential cover. Forward a copy of that to our attention.

If you have any questions, or wish us to expand on these points, we would be happy to work with you to keep your premiums at the lowest appropriate level.