Insurance AuditThe insurance audit is a process typical to the insurance industry. As your business operations change, so may your insurance premium. contact Us
Insurance Audit ServicesAn Indian Insurance Company is registered under the Companies Act, 2013. The aggregate holdings of the equity shares by a foreign company either by itself or through its subsidiary companies or nominees must not exceed twenty-six percent of the paid-up equity capital of such insurance company. The primary object of an Indian Insurance Company is to carry on life insurance business or general insurance business or reinsurance business. The Insurance auditors while conducting insurance audits shall examine the policy and liability procedures, tax documents, risk valuation and other financial records of insurance. This is done to ensure that proper insurance rates and premiums are implemented, and the insurance companies follow regulator laws. Some of the core areas to verify during insurance audits are claims and commissions. Further, the insurance auditors must also maintain the quality control between the insurance companies and policyholders.
What are the Types of Insurance Where Insurance audit Applies?Some of the types of insurance where insurance audit is applicable are as follows: The insurance audit service applies to all types of insurance contracts, either it is for individuals or companies.
- 1. Property insurance that can be of stock, buildings, reserves, home.
- 2. Liability Insurance such as employer’s liability, public liability, professional indemnity, environmental liability, product liability, etc.
- 3. Business Interruption as well as employee embezzlement insurance.
- 4. Insurances related to the theft of money and property.
- 5. Transit Insurance that includes sea, air, or land.
- 6. Life Insurances such as Permanent Insurance, Term Insurance, etc.
- 7. Health Insurance is an individual or group insurance.
- 8. Employees benefit Insurance Plan that includes life, accident, and health.
- 9. Pension Insurance that includes individual or group pension insurance.
- 10. Vehicle Insurance consisting of individual and vehicle fleet.
What is the Role of Insurance Auditors in Insurance Audit?
- The Central and Branch Auditors of an insurance company are appointed at the Annual General Meeting of the Company.
- Before making the appointment an appointment from the Comptroller and Auditor General must be received.
- TThe insurers as per the guidelines of the Insurance Act, 1938, and the Companies Act, 2013 must comply with the provisions with regard to the appointment of auditors.
- As per the recommendation of the Audit Committee, the board appoints the statutory auditors, subject to the shareholder’s approval at the general meeting of the Indian Insurance Company.
- The appointment of branch auditors is made to conduct the audit of the divisions having the same rights and obligations as per the statute. The branch auditors submit their report to the statutory auditors./li>
- However, at the division level, the branch auditors certify the Trial balance and incorporate the financial statements of the branches under the divisions.
- The insurer does not have the power to remove the statutory auditor without taking the approval of the authority.
- An audit firm cannot audit more than three insurers (Life insurance or Health Insurance or Reinsurer or Non-Life Insurance) at a time.
- They made an appointment that can be canceled if it is found that the appointment of auditors by the insurers is not as per the proposed guidelines.
Frequently Asked Questions
What is insurance auditing?
An insurance audit is a proper way of determining how much risk the insurer is insured over the past year. The company can have undergone a drastic change over that whole year your policy was in effect.
How do you audit insurance premiums?
The auditor shall check if the figures of premium mentioned in the register tally with those in General Ledger. The auditor will verify whether installments falling due on or before the balance sheet date, either received or not, have been accounted for as premium income for the year under audit.
Who appoints auditor of the insurance company?
The provisions of the companies Act 2013 applies for the appointment of an auditor. The auditor of an insurance company is generally appointed at the annual general meeting of the company, and the approval of the authority is required before making the appointment.
How would you conduct the audit of the insurance company?
Audit of insurance companies involves conducting an independent examination of books of accounts to evaluate their accuracy.
When will the audit be done??
Within 90 days after the expiration dates of the policy period so that any premium adjustments may be processed into your premium billing cycle. The auditor will notify you by mail or telephone shortly after the policy expiration date to schedule a convenient time for the audit. However, there will be no premium payment made at that time. Prepayment(s) for the premium will be applied to the account in the year following audit by the Auditor’s Closing Office. A 10% administrative fee will be added to each premium installment payment not paid within 30 days of notice to pay. This fee is non-refundable and may not be applied towards any refund or credit of premiums.