| P.I. #26302 |
| & INVESTIGATIONS |
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| Fraud News |
| Premium evasion cost California Insurers up to 3.8 billion dollars annually. |
In the spring 2008 edition of "Fraud Focus" news letter, distributed by the Coalition Against In the
spring 2008 edition of "Fraud Focus" news letter, distributed by the Coalition Against may hide 75
percent of their payroll for those dangerous jobs. This costs insurers up to 3.8 billion Insurance
Fraud, identified premium schemes and premium evasion as the biggest and fastest growing fraud
in the workers' compensation industry. "Employers in high-risk California industries may hide 75
percent of their payroll for those dangerous jobs. This costs insurers up to 3.8 billion in lost comp
premiums annually, says a 2007 study by the University of California Berkeley researchers."
spring 2008 edition of "Fraud Focus" news letter, distributed by the Coalition Against may hide 75
percent of their payroll for those dangerous jobs. This costs insurers up to 3.8 billion Insurance
Fraud, identified premium schemes and premium evasion as the biggest and fastest growing fraud
in the workers' compensation industry. "Employers in high-risk California industries may hide 75
percent of their payroll for those dangerous jobs. This costs insurers up to 3.8 billion in lost comp
premiums annually, says a 2007 study by the University of California Berkeley researchers."
Background
Compensation Insurance Rating Bureau of California (WCIRB) has defined “physical audit” to mean,”
An examination of the policyholder’s book of accounts and original payroll records as necessary to
determine and verify the exposure amounts by classification.
The WCIRB has defined “voluntary audit” to mean, “An audit of payroll that is based upon a signed
payroll statement obtained by the employer.” Policies with premiums $10,000 or greater must be
physically audited. Therefore, the Insurance Carrier must examine the policyholder’s book of
accounts and payroll records as stated above. For policies with premiums less than $10,000, the
insurance carrier has the option to conduct a physical or voluntary audit.
According to the WCIRB, there are approximately 600,000 active workers’ compensation policies in
California and Insurance Carriers are struggling to meet the audit requirements and therefore
waiving the audit requirement. By doing so Insurance carriers are waiving good-bye to profits and
jobs.
An examination of the policyholder’s book of accounts and original payroll records as necessary to
determine and verify the exposure amounts by classification.
The WCIRB has defined “voluntary audit” to mean, “An audit of payroll that is based upon a signed
payroll statement obtained by the employer.” Policies with premiums $10,000 or greater must be
physically audited. Therefore, the Insurance Carrier must examine the policyholder’s book of
accounts and payroll records as stated above. For policies with premiums less than $10,000, the
insurance carrier has the option to conduct a physical or voluntary audit.
According to the WCIRB, there are approximately 600,000 active workers’ compensation policies in
California and Insurance Carriers are struggling to meet the audit requirements and therefore
waiving the audit requirement. By doing so Insurance carriers are waiving good-bye to profits and
jobs.
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