Increasing Frequency and severity of GL Audits?

[Al3x Lee]

Has anyone noticed with their commercial book that audits are increasing in frequency, and the severity of non-compliance is also growing? This seems to happen a lot with the contractors in my book. The carriers used to be pretty lax, but now they want P&L, general ledger, tax forms, subcontractor certs, paystubs, quarterly reports, off-period payrolls, section 125, etc.

It's not any single carrier getting this way, either. They must be trying to recover some of their losses from the audits. Unfortunately, the agent doesn't even get a commission if the carrier charges an additional premium during the audits, so we get yelled at by the insured and don't even get anything for it.

 

[AZDave]

Unfortunately, the agent doesn't even get a commission if the carrier charges an additional premium during the audits

You mean no commission for non cooperation surcharge? That is true.

But audit premiums due pay me same % as the new bus. My book is 90% contractors, so totally understand the audits.

I use to see more 'self' audits too. But your right, some companies are brutal with the short time frames and requirements.

Had one last week where the auditor emailed me about a non compliance audit, gave the insureds one week to provide a bucket full of reports. Not a new insured to the Carrier and have never failed to provide prior audits. They are also a "pay as you go" on the WC, linked to their payroll totals, so their won't be any audit due. The surcharge was over $200k!

Sometimes it's true sales prevention done by these auditors!

 

[alexandromanuel]

I had a client that was also surcharged above $200k, is there any legal recourse or anything that can be done?

 

[Al3x Lee]

I had a client that was also surcharged above $200k, is there any legal recourse or anything that can be done?

Can you give us more details? What kind of client? What kind of policy? What were they surcharged for?

 

[alexandromanuel]

Good Morning,
It's a GL, for a construction company that builds custom cabinets for residential. They were audited, and apparently they under-reported their gross earnings. So now they have a balance due of over $200k on their prior year policy.

 

[Al3x Lee]

Good Morning,
It's a GL, for a construction company that builds custom cabinets for residential. They were audited, and apparently they under-reported their gross earnings. So now they have a balance due of over $200k on their prior year policy.

Wow! How far were they under reporting? Do you know what the rate is on the GL and how it's rated? It sounds like it's rated on gross receipts?