The WCRIBMA’s Governing Committee has approved implementation of a Test Audit Program to be rolled out in January 2019. Circular Letter No. 2337 outlines the program in greater detail.
The primary purpose of the Test Audit program will be to monitor the accuracy of audits carried out by the carriers and to ensure that the rules set forth by the WCRIBMA are being applied correctly. Additionally, the Test Audits will serve to assure statistical data that is reported to the WCRIB, improve auditing proficiency, establish minimum auditing standards among carriers and to maintain incentives to meet or exceed performance standards.
What Agents Need to Know
Agents may wish to educate insureds about why the WCRIB is conducting a second audit on their Worker’s Comp policy, how risks are being selected, and which risks will not be subject to a test audit.
Each carrier or carrier group will be subject to a quota of randomly assigned policies to be audited annually, determined by a formula set by the WCRIBMA.
“This quota is based upon a formula that encompasses the total number of policies written and the amount of premium written by the carrier in Massachusetts. The quota is adjusted based upon a review of the carrier's last four-quarter audit results. The quota will increase if the carrier's results are worse than the industry as a whole or decrease if the results are better than the industry. Unless the carrier’s quota is increased as a result of performance, the number of risks selected for each participating carrier shall not exceed 25 policies per quarter.”
The following chart taken from the letter outlines the timing of the Monthly Selection List, which will be provided to the carriers.
The letter also outlines the following risks which will not be subject to audit:
- Test audit has been completed within the last 5 years.
- Selected policy has been cancelled flat.
- Temporary staffing contractor.
- Part of a wrap-up and/or OCIP.
- Cancelled mid-term with no current coverage.
- Per Capita classifications.