Premium audits are conducted by The Builders Group so that our members’ premiums are fair and accurate. A premium audit is a review of your records and operations to ensure that the coverage information is correct. One of the conditions of your coverage agreement is for you to provide the necessary information to complete an audit. The goal of the audit is to determine what the correct premium should be based upon your actual experience during the coverage term.
The premium that you are billed at inception is actually an estimate based upon your job classifications and expected payroll. Classifications are selected by the types of work your employees perform and reflect different levels of injury potential. Your payroll during the term can change as you employ more people, as your employees work overtime and as you expand or diversify.
Audit Methods
TBG will use different methods to conduct premium audits based upon your premium size and/or the nature of your operations. The three methods that can be used are as follows:
- Physical Audit – Generally conducted at your office, the office of your accountant or other fiscal advisor by field auditors employed by an outside third party administrator field audit service. During a physical audit, the field auditor will review your accounting records, including payroll journals, disbursement journals, general ledgers, Social Security reports, state unemployment forms and other tax reports such as 1099s and quarterly 941s. It is advantageous to have a designated person available to assist the auditor, who is familiar with the work done by all departments and employees and the records needed to complete the audit. Accurate and organized records will help the field auditor conduct the audit smoothly and correctly so you won’t have to spend time correcting errors later.
- Phone Audit* – A representative of a field audit service or our own employees will contact you by phone to complete the audit. *This method has not yet been used and is being considered.
- Self Audit – We use the Self Audit method for members with small reported annual premiums (usually less than $15,000). If you will be using the Self Audit method, you will be notified by our Audit department via email that you need to complete a Self Audit.
We have a copy of the Self Audit forms in Word format below to print a paper copy or save the forms to your desktop and email, fax or mail them to us.
At the end of your coverage term, you will receive either notification from the field auditor service indicating the time and date of your physical audit or a letter from TBG requesting you to complete a self audit. Please contact your field auditor promptly if the appointment date will not work for you. Please complete the self audit form as soon as possible and return it to TBG.
In Minnesota you are permitted to split the payroll of your employees between two or more classifications if you keep proper records in four hour blocks of time for each activity. It is your responsibility to keep the payroll records necessary for the split. Percentages or estimates are not allowed. If accurate payroll breakout is not maintained, payroll will be assigned to the highest rated class code.
Subcontractors who do not provide you with proof of insurance coverage will be treated as employees. Please be ready to show the auditor (or provide the Audit Department in the case of a self audit) the certificates of insurance for all subcontractors employed and the contract costs involved for all subcontractors (as reported under 1099s).