Businesses with insurance policies must complete annual audits to make sure they are paying premiums that reflect their true risk exposure. Premium rates are initially estimated by combining qualitative elements like auditor bias with quantitative data from business operations and payroll. These estimates are reassessed every year in the form of an audit, usually following the expiration of a policy.
A corporation that overestimates its exposure receives a reimbursement in the form of checks or credits, while those who underestimate it are required to cover the difference. With 25–50% of organizations facing overcharges and premium leakage costing 10–20% of the $60 billion annual premium industry, inaccurate audits can be expensive.
Whether in person, over the phone, or online, the audit process entails an auditor examining financial information such as payroll records, tax filings, and cash disbursements. AI is being used more frequently in audits to increase data accuracy, reduce inaccuracies, and streamline the overall process. Learn more about the insurance premium audit process below.
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