Is there any defense I may have to this? I was never told that they could do this, and I didn't read the policy. Reading it now, and the clause is there.
I am guessing that you are referring to a worker's compensation policy, as that type of provision is almost universally found in those policies. You can appreciate that a lot of employers low-ball the number of employees, their wages and change the job descriptions to obtain a lower premium. The insurers are allowed to see the actual figures after the fact and to make adjust- ment to the premiums based upon actual practice.
The defense? If indeed this is worker's comp, then your defense are: 1) make sure that the audit isn't too late under the terms of the policy; and 2) is to show that the premium audit is incorrect, in terms of job classifications and actual payments made. Insurance companies make mistakes too.
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Insurance Law Lawyer
As you've now found out, in many policies the insurance company expressly has the right to audit and increase premiums. Unless they missed the time to do so you probably do not have a defense.
You might try complaining to your insurance broker, who probably should have told you about the possibility of an audit.