In 2017, the State of Wisconsin implemented a penalty that is mandatory on all Wisconsin Worker’s Compensation insurance policies. The penalty is called the Audit Noncompliance Charge (ANC). Businesses that do not comply with their workers’ compensation and general liability audits will see substantial penalties from their insurance carriers.

How Premium Audits Work

Workers’ Compensation and General Liability coverages are quoted on an estimated basis, and policyholders with these coverages are subject to an audit at the end of a policy term.

The audit is an opportunity to make sure the insurance carrier’s premium aligned with the policyholder’s exposures for the prior term. It can result in either a credit or additional charge in premium.

Why the ANC Originated and How It Works

Surcharges are intended to encourage compliance with premium audits by providing a means for insurance carriers to assess a fee for policyholders who do not provide audit information in accordance with policy terms and conditions.

Please note, the Audit Noncompliance Surcharge may be a significant sum for businesses, and it is an avoidable cost.

  • The Workers’ Compensation Noncompliance charge is two times the estimated annual premium.
  • For General Liability, we will increase the estimated exposures by 50%.

Insurance carriers will mail policyholders three requests to obtain audit information. If, after these requests, the carrier does not receive a response from the policyholder, they will apply the Audit Noncompliance Charges and increase estimated exposures. Failure to cooperate with the policy audit may also result in the cancellation of insurance coverage.

However, if the policyholder complies with the audit after the charge is applied, the carrier will remove the charge and update the audit.

Example of the ANC charge:

  $30,000 Estimated Annual Premium
+$60,000 Audit Noncompliance Charge
  $90,000 Total Amount Due

What to Do if You’ve Received an Audit Noncompliance Charge

The charge may be reversed once the policyholder provides all requested information for the audit. If you are unclear as to what information is needed to fulfill the requirements, please contact your insurance carrier’s Premium Audit Department directly. Contact information will be listed on all audit documentation sent to the policyholder.