State Treasurer Denise L. Nappier is the first Connecticut Treasurer to institute an assessment audit program in the history of the Second Injury Fund (SIF or Fund). Previously, there was no formalized method for ensuring that companies were paying accurate assessments. Since the formalized assessment audit program began in 1999, the Second Injury Fund has collected nearly $52 million in audit recoveries from businesses that underpaid or did not pay any assessment to the Fund.
Most Connecticut companies pay SIF assessments in accordance with state law. However, the companies that underpay or fail to pay unfairly burden other businesses with the cost of funding the Second Injury Fund.
The Audit Program – How It Works
Selection Criteria – Insurance Companies (one of the following applies):
- Systematic selection of insurance companies doing business in Connecticut
- Failed to report and pay standard premium assessment to the Fund
- Notice of bankruptcy
- If direct written premium reported to the Insurance Department was greater than the standard premium reported to SIF (annual verification process)
Selection Criteria – Self Insured Companies (one of the following applies):
- Systematic selection of all self-insured employers
- Failed to report paid losses for the calendar year to the Fund
- Workers’ Compensation Commission notifies the Fund of employer’s status change to self-insured
- Notice of bankruptcy
The Fund selects a company for audit and then sets up a conference call and/or face to face meeting with the appropriate company representatives. A letter from the accounting unit notifies the insurance company that their company has been selected for audit and they are given a detailed list of what the Fund will need for the audit and a submission deadline set for two - three months after notice to allow the company to compile the requested data.
Look-back Period - (effective July 1, 2006) the period of audit review is three years retrospectively.
When the requested information is received, the audit team tests the data. If the data matches the Fund’s original test selections, then accounting personnel verify the assessment due. If data doesn’t match, then the company must rerun detail until the employer reports correctly.
When the audit is complete, the company management is presented with the findings and is formally notified if it will be required to pay any additional assessment and interest.