Every year WCIRB Field Representatives visit nearly 18,000 California employer business locations to conduct classification inspections. Following each site visit, the Field Representative produces a Classification Inspection Report summarizing the employer’s operations and identifying which classifications are assignable to each identified operation or process.
Classification inspections are among the many ways that the WCIRB ensures the quality of the data we use for experience rating and advisory pure premium rates.
Here are the top five questions that insurance professionals ask regarding an upcoming inspection of an employer’s business:
What is the purpose of a WCIRB inspection?
The purpose of a classification inspection is to ensure that the employer’s insurance company is reporting payroll and claims cost data to the WCIRB using the proper classification(s). The WCIRB is authorized by the California Insurance Code (§11750.3) and the Insurance Commissioner’s regulations (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.
Is the inspection like an insurance company audit?
No. The intent of the classification inspection is to verify the classifications applicable to the business as a whole, not to determine specific classification assignments for individual employees. Classification inspections simply involve interviewing a knowledgeable representative of the business to obtain a complete description of the operations performed and number of employees, as well as touring the facilities to determine the physical lay-out of the operations and to obtain a comprehensive listing of equipment and machinery used. Classification inspections do not involve the review of company books or records and typically take less than 30 minutes.
Why was the employer selected for an inspection?
Most employers that are experience rated (i.e., qualify for an experience modification) will be inspected within one year of becoming eligible for experience rating. This is to ensure that the calculation of the experience modification is based on payrolls being assigned to the correct classification(s), and to help ensure the accuracy of payroll and loss data that is reported to the WCIRB by insurers in subsequent years. Depending on the complexity of the business, follow-up inspections generally occur every four to six years.
How will the employer know they have been selected?
Prior to our visit, we send the employer a letter advising that their business has been scheduled for a classification inspection. The letter includes information regarding the purpose of the inspection, the type of information that our Field Representative will be gathering, and how to contact the Field Representative to either get more information or to set a convenient date and time for the inspection.