It is vital that businesses understand how insurance premium auditing works so they can ensure that audits are being conducted smoothly. This is important, as audits that result in incorrect estimates can strike a heavy blow on a business’s bank account, resulting in excess charges. In order to develop the knowledge to successfully navigate insurance premium auditing, it is useful to understand the context of the process.
In the past, insurance carriers conducted audits, leaving the process in the hands of the insurance company, rather than the business. Insurance carriers would calculate a final statement based on estimates of insurance exposure. Depending on the final outcome, businesses would either receive a bill or a refund. Studies have shown that 25-50% of business owners with insurance policies may have been overcharged during an audit. This reveals the imperfections in the auditing process, as well as the consequences that follow inaccuracies.
However, the auditing process has changed over the years. Now, businesses enjoy greater flexibility during the auditing process, as aspects of the audit can occur online. Auditors review various records, such as cash receipts and payroll, then compile a final report.
Additionally, artificial intelligence is further changing the way that audits happen. AI has made it easier for auditors to spot and address anomalies, predict trends and increase data accuracy. Certain companies, such as AdvoQates, have begun to implement AI in the auditing process, kicking off a new era in insurance premium auditing.
Auditing has changed significantly, and more change lies ahead as technology advances. Understanding the past, present and future of auditing provides a strong foundation for making the most of the process.
