Premium audit
Where there is money involved- expenses, savings, surcharge, refunding so on, there is sure to be an audit too. One generally fears when they hear the term audit. There are different types of auditing, like utility bill auditing, internal and external auditing and so on. Here we talk about the premium audit.
The audit process of reviewing the records of the policy holders is known as the premium audit.The premium audit is done to ensure that the information regarding the coverage holds true and are accurate. That is premium auditing checks whether the insurance premium covers the risk exposure accurately. For the process of the premium auditing to run smoothly, the insured person also have to provide all the necessary information accurately.
At the time the policy was purchased, the premium was based on the information you had given at that time. You must have been aware that the rates of the insurance premium were based on the information that you provided.Premium audit will help you to determine the rates of the premium based on your experience.
In short you can say that the premium audit is a process of examining the insured records and operations.The person who contacts the insured to determine the extent of the risk exposure is known as the premium auditor.
Types of Premium Audit Process
The process of the premium audit depends on the nature of the business and also on the size of your policy. There are mainly three types of audit. They are listed below.
- Phone Audit- here you are contacted over the phone by a representative of your audit company to complete the auditing process.This type of auditing is carried out for medium sized accounts.
- Another form of auditing process is the mail audit.In this form of auditing a form which contains the instructions will be send to you through mail. You have to complete the form and return the same to the auditing company.This type of audits is conducted only for very small accounts.
- Finally, there is an audit called physical audit. Here the auditor will physically go to the business organization to check the accounting records.This is done when the premium accounts are large.
What do Premium Auditors do?
Premium auditors treat all types of policies with confidentiality. The premium auditor will review the records like the general ledgers, payroll ledgers, social security reports, other tax reports and so on. The reports generated by the premium auditors will get you the credits. They will also review the insurance premium to see if they cover all the risk factors.It is good if you are aware that the insurance premiums are based on the remuneration of the employees.This includes the bonus, paid vacation, wages, salary, profit sharing, overtime, reimbursement of medical bills and commission and so on. Therefore the premium auditor checks all these documents to see if it is possible to reduce the cost of insurance.
Premium audit reduces the insurance cost if the payroll ledger registers the overtime paid to the employees, if there is a division of payroll and if the subcontractors are also insured.
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