The primary purpose of a premium audit is to calculate your final premium. When your policy was issued, the premium was an estimate of an exposure basis (usually payroll or sales) multiplied by a rate. The rate used is determined by how the exposure base is classified. The audit will examine your records to establish the actual exposure basis and make sure that the correct classification codes and rates are used in determining your final premium. Because the original premium was an estimate, the audit will most likely result in a change of premium and/or classifications for your business.
Our premium auditors work in the insurance industry, focusing on premiums, or the price a consumer pays for insurance coverage. Our professionals audit the financial records and operations of insurance companies, analysing information to detect any possible fraud and to make sure laws and regulations are being followed. Education requirements for this field vary, but many prospective premium auditors seek bachelor's degrees in accounting or related fields.
Our premium audit is commonly performed on all SMEs and Multinational companies dealing with General Liability, Business Liability and Workers Compensation policies. By auditing these policies, we can make sure that your business pays the correct premium. Typically, information from the audit will generate either a bill or a refund. In addition, the premium audit can provide valuable information about your business operations. The audit process is designed as a service to you that guarantees you only pay the premium that you owe.
Auditors ensure financial operations of insurance companies are properly conducted, and policies and regulations are adhered to. Premium auditors are also responsible for quality control within the insurance industry, especially regarding interactions between companies and their clients.
An insured’s policy is issued based on estimated exposures. These are typically payrolls and classifications. The advance or deposit premium is calculated based on these estimated and projected exposures. The final premium is determined, through the premium audit, after a policy ends by using the actual, not the estimated, exposures to make sure that the insured’s final policy premium is proportionate to the actual exposures realized throughout the term of their policy.
At the end of the insured’s policy term, an audit professional will contact them to perform a review of their operations, records and books of account. Based on the outcome of the premium audit, an adjustment may be made resulting in either an increase or decrease to their deposit premium.