Why,are,Insurance,Premiums,Aud business, insurance Why are Insurance Premiums Audited?

Small offices have unique needs, and thatincludes document shredding. Designed with the smaller business inmind, the Dahle 20314 is a cross-cut shredder that offers Level 3security and brings you into compliance with federal regulations. The As we all know to live in this world we have to perform some activity by which we can earn money. There are many activities by which we can earn money and meet the standards to live in this society. And from one of them is franchise.  Franc

Insurance policy audits are conducted yearly for all businesses. Preparing for the audit can make the difference between a 'bad audit' experience or a good one. Avoid the potential stress, lost productiviey, increased premiums or possible policy cancellations by preparing for your audit.What is an insurance audit?Policies are audited to ensure that the premium charged by the insurance company reflects their actual exposure, which was estimated at policy inception.Insurance audits are performed by employees of the insurance company or independent auditors hired by the insurance company; in some cases forms will be sent to the business for a 'self audit' process. In all cases, the business must prepare information and utilize the time of its employees to respond to the audit. The level of personnel required varies based on the company's size. Personnel required might include the Office Manager, Accounting Manager, Controller or external CPAs. Data is collected and provided to the insurance auditor by the company personnel.What is the auditor looking for?Insurance companies audit certain Liability policies and ALL Workers' Compensation policies. The audits collect exposure information estimated when the policy was written and compares it to the actuals. This data is then used for determining and adjusting premium amounts. Information typically (though not exclusively) required includes the following:* Liability PoliciesØ Gross company salesØ Independent contractor costs (insured and uninsured)Ø Payroll for certain types of exposures* Workers' Compensation PoliciesØ Actual employee payrollØ Cost of independent contractors if no certificate or proof of other coverage is providedThis information may be in the form of payroll records, Federal Form 941, Financial Statements, Check Registers and Certificates of Insurance from contractors/vendors. A company's use of contractors can be determined by information disclosed in the financials or check register. Contractors/Vendors that do not have valid insurance certificates proving independent coverage will be added to the company's exposure totals. Not only do the possibly uninsured contractors/vendors increase a company's exposure to loss, they can also cause significant increases in their premiums.What makes for a 'good audit' experience?The main requirement for a 'good audit' experience is having all the information requested readily available for the auditor when they arrive on the premises. This includes easy access to contractor certificates of insurance demonstrating that the coverage is current and meets required limit levels. The upfront preparation and organization by the company can prevent ongoing audit responses and adjustments later on. Another 'good audit' experience is no surprises such as large premium adjustments, amounts due or returns after the audit is complete.What makes for a 'bad audit' experience?If the company cannot readily access the requested data, a variety of unwanted events can occur including:Ø Excessive waste of time for the auditor and company personnelØ Company (Policy holder) gets a bill for a large additional premium for the audit period and next periodØ Company must immediately contact contractors requesting certificates and forward to auditor for premium adjustments, requiring significant time for both parties.What are the potential consequences of a bad audit?The results of a bad audit can be severe, especially if the audit resulted in additional premiums. Policies may be cancelled due to non-payment of the additional premium or for non-cooperation in the audit process. The company could have their credit affected. Staff will need to dedicate additional time to correct or adjust audit discrepancies, resulting in lost productivity and a disruption of the work routine. An insurance company could cancel the easy 'self audit' process and insist on 'in person' audits.How do you avoid a 'bad audit' experience?Two words - be prepared. Understand what is auditable and what the audits are based on. Have the requested financial information available for the auditor. Present up-to-date insurance certificates for all vendors and contractors indicating limits meet requirements and coverage dates are current. Be sure the certificates are tracked and kept up to date. The best way to manage contractor certificates is by maintaining an automated certificate tracking system that provides policy expiration notices and allows you to attach images of the certificate for quick access during the audit, helping to avoid unnecessary adjustments to the premium. Automated systems - notably insurance and vendor tracking software - are available on the market to help in this process.To survive your insurance audit, make sure you know what the auditor wants in advance, collect and organize the information and be ready to find additional data quickly. Avoid the pitfalls and surprises of the 'bad audit' experience!