Understanding your Statement of Audit

Your statement of audit provides a comparison of your estimated premium based on your estimated payroll at the beginning of your policy period along with any payroll changes submitted during the policy term, and your audited premium based on your actual payroll. You might also see one or more of the following items on your Statement of Audit.

Coverage B

The Employer Liability portion, or Part B, of your workers’ compensation policy provides coverage for legal defense costs when an injured employee sues a third party and that third party then sues the employer. For example, an employee could sue an equipment manufacturer, and the manufacturer could then sue an employer for negligence claiming they had removed guards from the machine.

Experience mod (e-mod)

This is a multiplier that is based on your claim history compared with that of similar employers. If your loss experience is better than average, your modifier will be less than 1, and it will reduce your premium. If it’s worse than average, it will increase your premium.

Minimum premiums and expense constants

Minimum premium is the lowest premium we can provide for a standard policy.

In most circumstances if a policy is cancelled mid-term or if a policy is written for a term that is shorter than 12 months, the minimum premium and the expense constant are to be prorated, based on the regulations we must follow as a workers’ compensation carrier. There are a few exceptions to this where we may charge the full minimum premium and expense constant:

• When a policy is cancelled because the Premium Finance Company tells us to cancel.
• When the policyholder decides to move to another carrier mid-term.
• When we issue a short-term policy for reasons other than to replace a binder or to match other policy dates.

We currently prorate in all cases, including the exceptions noted above.

Premium discount

This discount is applied because the relative expense of issuing and servicing larger premium policies is less than for smaller premium policies.

Terrorism Risk Insurance Act (TRIA)

This mandatory charge helps fund the federal program that provides compensation related to acts of terrorism.

MN Special Comp Fund Assessment (SCF)

The Minnesota Special Compensation Fund pays benefits to injured workers of uninsured employers and supplemental benefits to certain low-wage workers. It also pays the cost of operating the state’s workers’ compensation system. It is administered by the Minnesota Department of Labor and Industry. This charge is calculated as a percentage of pure premium.