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WCIRB Premium Audit Accuracy Program

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WCIRB Premium Audit Accuracy Program

The WCIRB Premium Audit Accuracy Program (PAAP) establishes minimum auditing standards for monitoring insurer performance, improves audit proficiency through evaluation of insurer auditing practices, and provides oversight of an insurer’s premium audit practices to ensure audit rules are applied consistently across all California employers. This program, together with a variety of other approaches the WCIRB uses to ensure that timely, complete and accurate USR data is used in experience modifications, advisory pure premium rates and research, aligns with the WCIRB’s objective of targeting the most effective methods for maintaining high standards of data quality while minimizing the manual touchpoints associated with the exchange of data.

Part 1 of the PAAP is administered in accordance with the California Insurance Code which requires the WCIRB to initiate test audits to ensure the accuracy and reliability of insurers’ payroll audits as well as the accurate reporting of exposure and claims classifications pursuant to the California Workers’ Compensation Uniform Statistical Reporting Plan–1995 (USRP) and the accurate application of experience modifications by insurers.

In Part 1 of the PAAP, policies are eligible for test audit selection if the unit statistical report (USR) has been submitted with a final premium meeting the physical audit requirements of the USRP and exposure reported as audited. Exposure and claim classifications reported on USRs selected for test audit are then reviewed for compliance with program provisions.

Part 2 of the PAAP consists of the “Unaudited Payroll” data quality metric that assesses an insurer’s premium audit proficiency by determining the percentage of USRs requiring physical audit that are submitted with payroll reported as unaudited.

Quarterly reports are released to participants to provide a comparison of insurer’s results against acceptable standards under Parts 1 and 2 of the program. Insurers that do not meet specific performance standards of the program are required to take corrective actions and may be assessed fines.

A summary of the WCIRB Premium Audit Accuracy Program is provided in the chart below:


WCIRB Premium Audit Accuracy Program
Part 1: Test Audits of Payroll and Claims Classification Reporting


Risks Eligible for Test Audit

USRs submitted for policies requiring physical audit and reported with audited exposure – up to 22 months after policy inception

Reportable Differences Data Reporting A physical audit was required but not performed
  Timeliness Required audit materials are not submitted within 30 days following the due date


Exposure Sum of absolute pure premium difference for each standard classification exceeds 5% of total insurer pure premium


Claims Classification More than 10% of claims test audited are assigned to incorrect classification(s) (no more than 20 of the largest compensable claims are subject to test audit)


X-Mod Premium invoice applies the wrong experience modification


Late Audit Material Submission

$200 one-time fine if not submitted by the due date


Late Corrected USR Submission

$500 monthly fee for post-test audit USR corrections not received within (1) 30 days following WCIRB notification to submit a corrected USR (issued 60 days following publication of test audit report with reportable difference(s)) or (2) 30 days following WCIRB’s response to a test audit protest upholding the reportable difference(s)

WCIRB Premium Audit Accuracy Program
Part 2: Physical Audit Compliance

Unaudited Payroll Reporting


Percentage of original first report level USRs for policies required to be physically audited but reported as unaudited

  Tolerance 5% over a four-quarter period, based on a minimum of 15 USRs with unaudited payroll

If you have any questions regarding the program, please contact the WCIRB Data Quality Assurance Office at