How is the Workers’ Compensation premium finalized at the end of the term?

The finalization of the Workers’ Compensation premium at the end of the term is primarily done through an audit of all payroll records and documents. This process is critical because it ensures that the premium is adjusted based on the actual exposure to risk during the policy period.

When the policy is initially issued, the premium is often based on estimated payroll figures. At the end of the term, an audit helps identify the actual payroll and workforce classification, which can fluctuate throughout the policy period. This results in a more accurate calculation of the premium, aligning it with the actual risk presented by the insured's activities.

Using accurate payroll records enables the insurance company to assess the risk exposure effectively, leading to a premium that reflects the true nature of the business's operations and the associated likelihood of employee claims. This practice not only safeguards the insurance company but also protects businesses from overpaying for coverage that doesn't represent their level of risk.