Audit

Generally, the final earned premium is based on the amount of remuneration for each job class code covered on the policy. 

Types of Audits

Waived Audits

A waived audit is an audit processed as the policy was issued, using the policy estimates as the final audit figures. The decision to waive an audit is based on numerous factors including history of policy, prior audits, premium size, subcontracted or casual labor, prior physical audits, consistency of payroll, etc. A waived audit will be performed a maximum of two consecutive years. Construction risks do not qualify for waived audits nor on businesses where payrolls can fluctuate widely from year to year.

Online or Mailed Audits

A Policyholder’s Report is an audit form which is filled out by the policyholder. This can be completed by filling out the physical form received in the mail, or by following the instructions on page one to complete online (note: offered only to policyholders of a certain size premium). Please answer all questions accurately and to the best of your ability. If the question does not apply to your business, please answer with “N/A.”

You should send the quarterly total report from your 941, which breaks down your total quarterly payroll by quarter. You should also send a spreadsheet including the names of each employee and what he or she earned during the course of the policy period. This information should be sent in addition to, not in place of, your fully completed audit form.

Virtual or Phone Audits

Certain policies are selected to have their audit completed electronically through MEMIC’s secure email system and with a MEMIC auditor over the telephone. This is a more efficient way to conduct a final premium determination. If you have been selected for a phone audit, please see the information below to get an idea of what will be asked of you:

1. Payroll report for the policy period which lists each employee, their duties (or department), their gross wages, overtime wages and any of the following that may apply (severance pay, third party sick pay, reimbursed expenses through payroll and Group Term Life Insurance (GTL). It is preferred that this report be in Excel format
2. Federal 941s for the four quarters that correspond closest with your policy period. If the most recent 941 is not available, use the four most recent quarterly 941s available
3. Total amount of Section 125 deductions for all employees for the period (not needed if it is included in the payroll report)
4. A list of current officers of the corporation, owners or members of the LLC

Physical Audits

As provided in your policy provisions, the estimated premium basis is subject to adjustment. During a physical audit, one of our staff auditors or contracted auditors will set up an appointment to meet with you at your place of business. They will discuss the operations of your business and will tour your facility. They will examine your payroll and other financial records to determine the final earned premium for your policy period. This also helps to ensure that your operation is correctly classified according to NCCI regulation.