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Why Accurate Workers’ Compensation Audits Matter More Than Ever

Dec 18, 2025

If you work in workers’ comp underwriting or risk placement, you know how easily payroll shifts, operations evolve, and outdated class codes can derail even the cleanest account. A new Insurance Business piece highlights just how big the impact can be, and why proactive audits should be on every agent’s radar heading into 2026. 

Pro Global’s 18-month analysis shows that insurers using proactive audit strategies can uncover up to 18% in additional premium that should have been captured in the first place. In other words, when exposures drift, that missing premium becomes leakage, and audits bring it back into view.

Where Premium Leakage Starts

According to Pro Global’s aggregated audit results, the biggest culprits are familiar ones:

  • Misclassification
  • Underreported payroll or sales
  • Noncompliance with state rating bureau requirements

These issues aren’t new, but the operational shifts of the last few years, like the move from hybrid labor models to cross-trained teams, have accelerated exposure creep across many industries. And when the numbers don’t match the actual operations, carriers lose revenue and insureds face disputes or surprise bills. Robert Sherman, U.S. Head of Audit & Advisory at Pro Global, put it plainly, stating, “​​Accurate exposure reporting is the cornerstone of a sustainable insurance model, yet too often the industry accepts avoidable leakage.”

Jencap’s Perspective: Why This Matters for Agents

Jencap’s own workers’ comp experts are seeing the same trends play out in real time.

“Carriers are increasingly diligent in their audit processes,” says Jeff Sandy, Vice President of Workers’ Compensation at Jencap. “Audit professionals often provide accurate evaluations, and the defense of ‘it has been done that way for years’ is not a valid justification for maintaining inaccuracies.”

For agents, that’s a strategic warning. Relying on legacy class codes or past audit outcomes can set clients up for avoidable pain, especially when a large AP premium hits months after expiration. “It is essential to take the time to review classifications and the changing operations of your insured during the renewal process,” Sandy adds. “A significant additional premium five months after the policy expiration can create unnecessary challenges.” The more complex the account, the more critical this becomes.

Market Conditions Raise the Stakes

The article also notes that while the workers’ comp market remains stable, with a combined ratio of 86.1% and frequency continuing its long-term decline, severity is rising on both the medical and indemnity sides. Indemnity severity is outpacing wage growth, and medical severity is being driven increasingly by utilization, so workers’ comp underwriting accuracy is under more pressure than ever. Clean audits help protect margins and keep pricing grounded in real exposure.

Your Next Best Move

If your clients’ operations have shifted even slightly, now is the time to tighten up exposure reporting and classification reviews. Read the full Insurance Business article for deeper insights, and if you need help navigating audits or tightening workers’ comp underwriting strategy, reach out to Jencap’s workers’ compensation specialists. We’re here to help you get ahead of renewal surprises and protect your book from avoidable leakage.
The Jencap Workers' Compensation Insurance Team

The Jencap Workers' Compensation Insurance Team

Workers’ compensation is not a generalist’s game. Jencap’s dedicated division of industry-leading workers’ compensation experts understands every facet of this complex coverage line — from multi-state operations and high-hazard risks to United States Longshore and Harbor Workers Compensation Act (USL&H), and everything in between. No matter your clients’ industry, state, experience modification factor, premium size, or class code, the Jencap workers' compensation team has you covered.

Workers’ comp underwriting | Workers’ compensation audits | Premium leakage

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When it comes to workers’ comp, you don’t want a generalist broker who dabbles in a number of lines. You want someone who focuses on workers’ compensation policies, day in and day out. Our team of brokers has expertise in every corner of the workers’ compensation market and understands the legislative nuances across each state. We have the premium volume, carrier clout, and long-tenured relationships with the best workers’ compensation carriers in the industry. From monoline options to packaged solutions and everything in between, Jencap has an insurance solution that will address your clients’ needs.
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