While the mere mention of an insurance audit can induce panic in the most stoic of business owners, you can breathe a little easier – if you take the right steps.
We recently sat down with George Gavaris, the owner of Central Insurance Agency (also known as CIA), to discuss ways to make the audit process less daunting. He is a longtime insurance industry expert who has a thorough understanding of the audit process. George believes that not only can the process be less stressful, a business owner can actually benefit from an audit in the long run. Here’s how:
Tip #1. Don’t wait until the last minute to involve your insurance broker.
Insurance brokers will often conduct an audit near the end of a policy period to ensure the premium is appropriate for the coverage provided. But here’s the key: Don’t wait for their audit – conduct one of your own. By having your broker proactively conduct a review, you can protect your business from miscalculated and higher premiums now.
“Ideally, the best time to have your broker conduct an audit is in the middle of a policy’s effective dates – before your carrier typically looks to do one,” says Gavaris. “That way your broker can do an audit review in advance to mitigate any issues.”
Tip #2. Don’t worry – insurance audit issues are common.
Workers’ compensation is typically the number one auditable aspect of coverage, and general liability runs a close second. But you can hedge against the potential of negative audit findings. When compiling the documentation for an audit review, make sure your employee classifications are current and reflected in your payroll records. Insurance carriers look to assign a higher premium rate to employees in positions associated with higher risk. For example, a customer service representative’s desk-job rate may be at a lower rate than that of a security guard at a post.
Tip #3. Make sure your broker really knows your business.
The smartest approach to mitigating the potential impact of an audit is to make sure that, from day one, you’ve been upfront with your broker about your company’s operations. And just as importantly, the broker should know the idiosyncrasies of your type of business. “An experienced insurance broker can help guide you through every step of the process,” says Gavaris. “But to be as effective as possible, your broker must be well-versed in all aspects of your business to determine which areas of your operations are driving your premiums.”
To learn more about the audit review and counseling process, please visit https://ciainsures.com/insurance-audit-counseling/.