Situation:
A contractor based in central West Virginia uses heavy equipment to lay pipeline for natural gas producers. The company provides commercial and industrial excavation services.

Following a Workers’ Compensation premium audit by the insurance company of the contractor’s records, the increased exposures resulted in a $93,000 audit bill. However, upon examination, the records failed to separate “shop and maintenance” time from actual time spent on the pipeline/excavation work. Also, no overtime records were provided to the auditor and standard exclusions were not claimed.

Assessment
An assessment by an auditor employed by Mountain State Insurance revealed these and other areas of interest. This led to a complete reconstruction of the payroll records for the period reviewed.

Solution:
The following steps were taken. First, payrolls were recomputed to isolate overtime payments. Second, duties of employees were re-examined to isolate clerical and full-time truck drivers. Finally, the independent auditor used National Weather Service and NOAA data to determine rain and snow precipitation on workdays during the policy period. When precipitation exceeded a threshold amount, that day's payroll was charged to shop/yard work that carries a much lower rate, since such work cannot be completed when the ground is wet. The auditor constructed a database and spreadsheet to document the changes.

Result:
After reviewing the data provided by the independent auditor, the insurance company conceded on all issues and reduced the audit bill to the amount developed by Mountain State's independent auditor. The revised amount was approximately $90,000 less than the original bill.

Situation:
This oil and gas company obtains property rights, drills wells and services the wells using equipment and personnel hired by the three corporations that comprise the operating unit.

The client had received a proposed classification scheme that failed to consider standard exclusions, overtime exclusions and different classifications for various work performed in connection with its operations.

Assessment
A review of the company’s proposed classification by the carrier revealed serious errors which, if not corrected, would have caused the misclassification of many of its employees and resulting in a substantial additional cost.

Solution:
The following steps were taken. First, payrolls were re-examined to isolate overtime payments. Second, duties of employees were re-examined to isolate yard, clerical and full-time truck drivers. Third, the correct classifications and exposure levels were communicated to the insurance company along with incontrovertible evidence.

Result:
After reviewing the data provided by the independent auditor, the insurance company conceded on all issues and reduced the amount due from $180,000 to $110,000. The revised amount was approximately $70,000 less than the original bill.