06/23/2026
I’ve completed my review of deposition testimony by a “forensic premium auditor” from a major Workers Comp insurer, and I wanted to write about one particular misrepresentation contained in that testimony, among the many that I’ve flagged.
The case involves assigned risk Workers Compensation premiums and audits, and at one point this auditor talks about how informing the policyholder about the various details of Workers Compensation insurance premiums is routinely handled by the insurance agent that sells the policy.
Except it isn’t.
Particularly for small premium assigned risk Workers Compensation policies.
I’ve run across this kind of self-serving opinion by other insurance company personnel over the years and it’s so contrary to what I know to be the real world situation that I wanted to write about it here.
I guess I shouldn’t be overly surprised at this testimony. The deponent, in spite of a fair bit of experience as a premium auditor, has never been an insurance agent. Nor has he worked with small business policyholders on the other side of the insurance transaction. So I guess I shouldn’t be so surprised that he doesn’t know whereof he speaks, on this issue.
In the real world, insurance agents aren’t obliged to be anything more than honest sales clerks, unless they voluntarily elect to be more. So agents selling small premium Workers Compensation insurance policies through assigned risk plans often can’t justify taking a lot of time serving as insurance advisers, because commission income from such sales is very small.
Plus, insurance agents handle multiple lines of insurance and generally aren’t trained in the deep technical details of Workers Compensation premium and audit rules. It’s an area of specialization that isn’t really covered in the more generalized insurance training they receive.
Sure, some make it their business to learn more about such things, or pick it up through experience. But those insurance producers concentrate their time and effort on larger, more lucrative accounts. They have to, to survive.
The agents selling assigned risk policies to little home remodeling guys for $1,500 initial premiums are making about a hundred dollars off each sale. So it’s a volume business that doesn’t support offering a lot of detailed advice about premium auditing (an area of insurance that is a specialized field of study and training.)
And so, typically, these insurance producers simply don’t do that, in my experience. And they’re not required to do that. Their training typically doesn’t even cover these technical issues.
Thus, these little home remodeling folks often walk into a trap that is sprung after the policy ends, when some SIU auditor decides to really pull out the stops and start examining fine details and hidden rules that were never explained to the policyholder by the agent.
And that $1,500 policy gets turned into a $100,00 audit bill.
