Inspection Information
The payroll and loss data reported to the WCIRB by classification is a vital part of the pure premium ratemaking process. To help ensure the integrity of this data, the WCIRB conducts inspection site visits of employers' operations for classification purposes and conducts test audits to validate the accuracy of the unit statistical report (USR) data that insurers submit subsequent to completing their final audit. These site visits and test audits are mandatory and are performed pursuant to the authority granted to the WCIRB by the California Insurance Code (Section §11750.3) and the California Workers' Compensation Uniform Statistical Reporting Plan—1995 (Part 3, Section VI).
The WCIRB is authorized by the California Insurance Code (§11750.3) and Part 3, Section VI, of the California Workers' Compensation Uniform Statistical Reporting Plan—1995 to inspect the premises of any insured business for classification assignment purposes. These comprehensive inspections ensure that insurers use the proper classification assignments when reporting data to the WCIRB regarding an employer's workers' compensation insurance policy. Accurate classification assignments and payroll reporting are necessary to ensure the integrity of the data used in the experience rating system. Once an inspection is completed, the WCIRB will automatically send a copy of the inspection report to the employer.
If selected for a site visit, a WCIRB field representative visits the employer’s place of business to interview a knowledgeable employee and tour the facility. In some cases, the inspection information may be obtained remotely through a telephone interview or virtually using an online viewing app. Following the site visit, a Classification Inspection Report is prepared describing the business operations. It includes an estimated count of employees and an estimate of the annual payroll by department. Typically, these reports are produced within 30 days of the site visit, and a copy of the Report is sent to the employer and the employer’s insurer. The insurer and authorized agent or broker may access the Report on WCIRB Connect® once it is published.
It is important to note that Inspection Reports are intended to identify the Standard Classification(s) that best describes the employer’s business operations. The classification assignment for individual employees is within the purview of the insurer and cannot be determined definitively until the time of the insurer’s final audit when the insurer obtains a complete description of each employee’s duties actually performed during the policy period. In other words, the Inspection Report is not a substitute for a premium audit.
Employers who would like to have a WCIRB inspection must pursue the request through their insurer or agent/broker of record.
Special Inspections
A special inspection may be requested by an insurer to conduct a physical inspection to confirm the classification applicable to the employer’s operations. Special inspections do not require that the insured be experience-rated.
To request a special inspection, the insurer must complete Form 501, Request for WCIRB Inspection of Insured (available via WCIRB Connect®) and submit it electronically to the WCIRB Contact Center. The cost of the special inspection is $200 per inspected location. The WCIRB will invoice the insurer at the end of each month for the total number of special inspections conducted, log in to WCIRB Connect to request a Special Inspection.
Original Inspections
When an employer first qualifies for experience rating, the WCIRB will perform an inspection.
Renewal Inspections
Experience-rated employers are reinspected approximately every seven to ten years. Renewal inspections are performed to verify that the classification codes assigned in the previous inspection are still valid.
A special inspection may be requested by the agent/broker of record to conduct a physical inspection to confirm the classification applicable to the employer’s operations. Special inspections do not require that the insured be experience-rated.
To request a special inspection, the agent or broker of record must complete Form 501a, Request for WCIRB Inspection of Insured (available via WCIRB Connect®) and submit it electronically to the WCIRB Contact Center. The Contact Center will then initiate a digital authorization from the policyholder to ensure that the policyholder approves of the request. When the special inspection is completed, Authorize.Net will email an electronic invoice to the requester on behalf of WCIRB California and process the credit card or ACH payment. The cost of the special inspection is $200 per inspected location. The WCIRB accepts Visa®, Mastercard® and ACH, log in to WCIRB Connect to request a Special Inspection.
A test audit is an examination of the unit statistical report (USR) data submitted by the employer’s insurance company after a premium audit has been conducted. Test audits validate that the insurer assigned the proper amounts of payroll to the correct classifications, ensure the proper experience modification is used on the policy and verify that the correct classifications have been assigned to claims of any size. The WCIRB randomly selects a number of employers for a test audit based on a quota for each insurer. The test audit is performed to verify the accuracy of the insurer's final audit.
A WCIRB Field Representative conducts a test audit at the employer’s place of business or at the location where the employer’s records are maintained by reviewing all relevant payroll records and reports, including but not limited to payroll registers, payroll journals, individual earning reports, time cards, job records and state and federal quarterly payroll reports, e.g., DE9s or 941s. The WCIRB representative also inspects the business operations to validate the classification assignments that were made by the insurance auditor. In some cases, the inspection information may be obtained remotely through a telephone interview or virtually using an online viewing app. The results of the test audit are provided to the insurer.
Approximately 3,000 test audits are performed annually. Policies are selected for test audit at random and will generally not occur more than every four years. Selection for a test audit is not a reflection of the employer's business or that of the insurer.
WCIRB Classification Inspection Report
When the WCIRB’s team of Field Representatives conducts on-site reviews at policyholders’ business locations, they gather a detailed description of the operations to verify the classifications that apply to the business. Based on this review, the Field Representative prepares a Classification Inspection Report that is sent to both the policyholder and their current insurer.