Or. Admin. Code § 836-043-0130 - Selection of Risks for Test Audit
(1) All insurers or insurer groups shall be
test audited on a continuous basis. Each quarter, the bureau shall send a list
of policies selected for test audit to each insurer's Oregon policy issuing
office or other office designated by the insurer.
(2) The number of policies to be selected for
each insurer shall be determined based on Exhibit 1, using the insurer's
current policy premium distribution and the error ratio from the insurer's
previous test audits. The policy premium distribution shall be based on
estimated annual standard premium reported by the insurer for policies subject
to selection. For each insurer, the error ratio shall be the number of policies
found to have audit errors divided by the total number of policies test audited
during the latest six quarters. The error ratio shall be assigned a credibility
weight, as described in Exhibit 1, and the complement weight shall be assigned
to the statewide error ratio of all insurers for the latest six quarters. The
credibility weighted error ratio for the insurer shall be used to determine the
policy sample rates in Exhibit 1.
(3) The quarterly list of policies selected
for test audit shall be randomly drawn from an insurer 'entire book of workers'
compensation business, subject to the requirements of section (2) of this rule.
Additional policies may be added at the request of the director. The list shall
indicate, for each insurer or insurer group, the insured, the policy number,
the issuing office (if available) and the policy dates. This list shall only
include policies with expiration dates not less than 90 days prior to the date
of selection. Unless otherwise requested by the director, this list shall
exclude:
(a) Wrap-up policies approved under
ORS 737.602 or Sections 1 and 2,
Chapter 336, Oregon Laws 1995;
(b)
Policies for risks that have been test audited within the four-year period
prior to the date of selection; and
(c) Policies canceled by either the insured
or the insurer prior to the expiration date of the policy.
(4) Within 45 days after receipt of the
selection list, each issuing office shall provide the bureau the following
audit material on those risks for which it is responsible:
(a) If an audit is performed, a
non-returnable copy of the auditor's work sheets and the premium
invoice;
(b) Correspondence
pertinent to proper completion of the audit;
(c) If the insured' payroll report has been
utilized, a copy of the insured' payroll report and the premium invoice;
and
(d) A list of all compensable
indemnity claims. The claim listing should also reflect each compensable
medical-only claim with reported loss amounts of $5,000 or more. The bureau
must receive at least the name of the injured employee and the date of
accident, although the following information must also be submitted if
available; job title, nature of injury, Basic Manual classification to which
claim is assigned, claim file number and a brief description of what the
employee was doing when the accident occurred. (See Exhibit 1.)
(5) At least 10 days before the
test auditor's planned date of call, the auditor must inform the insured in
writing of the planned date of call.
(6) The written notice required by section
(5) of this rule must include certain information. An example of acceptable
written notice is located on the Department of Consumer and Business Services,
Insurance Division website at www.insurance.oregon.gov. The notice
must include the following information:
(a)
Identification of the insurer, the insured, the policy number, and the policy
period being audited;
(b) The
scheduled date and time of the test audit;
(c) Explanation of the test audit program and
the statutory authority to conduct test audits;
(d) Identification of the bureau responsible
for conducting the test audit;
(e)
Explanation of the bureau' authority under the policy to examine the insured'
records;
(f) Explanation of the
types or specific records the insured must make available to the auditor;
and
(g) Contact information for the
auditor.
(7) The bureau
shall complete the test audits within six months of the date of selection. Test
audits not completed within the six-month period may not be included in the
insurer's result. Nevertheless, the insurer shall submit a revised unit
statistical report for any late test audits that would have otherwise
constituted an error. The director may request the bureau to provide a
quarterly report of test audits that are not completed in a timely
manner.
(8) The following must be
obtained from bureau files:
(a) A policy data
sheet providing all necessary information shown on the insurer's policy;
and
(b) A copy of the latest bureau
inspection.
Notes
Exhibits referenced are available from the agency.
Statutory/Other Authority: ORS 731.244 & 737.318
Statutes/Other Implemented: ORS 737.318
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