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By Veluru Harish, Pooja K C, Ankush Raj, Hanisha V Lokhande On 11 Apr 2023
This blog is published byVeluru Harish, Pooja K C, Ankush Raj, Hanisha V Lokhande
An essential step in the insurance process is the premium audit which confirms that the insured has paid the appropriate premium based on their real exposure to risk during the policy duration. The insurance company or a third-party auditor performs the audit, normally done at the conclusion of the policy period. To verify the correctness of the information provided to compute the premium, the auditor will examine the insured’s financial records, employment records, and other pertinent documents during the premium audit. This includes sales and payroll records and any pertinent information influencing the calculation of premiums.
To appropriately reflect the insured’s risk exposure during the policy period, the premium must be adjusted because of the premium audit. The insured may be obliged to pay an additional premium to the insurance provider if the audit indicates that they underpaid their premium. On the other hand, the insured can be qualified for reimbursement from the insurance provider if the audit reveals that they overpaid their payment. This apart, to guarantee that the premium audit appropriately reflects the insured’s risk exposure, it is critical for insureds to furnish the insurance company with accurate and comprehensive information throughout the policy period. In the event of a loss, failing to do so could lead to a higher premium or the denial of a claim.
“The U.S. Bureau of Labor Statistics reports that despite the changes the pandemic brought, the labor force will continue to age, with workers over the age of 55 increasing from 21.7% in 2014 to nearly 25% by 2024. Although older workers tend to file fewer workers’ compensation claims, when they do file them, the costs tend to be higher due to the severity of the injury.”
The general liability insurance market is experiencing substantial growth as more individuals and businesses understand the importance of safeguarding their assets and livelihoods. According to the report published by Acumen Research and Consulting titled “Liability Insurance Market Forecast, 2022 – 2030”, the Global Liability Insurance market size in 2021 stood at USD 251,700 Million and is set to reach USD 418,800 Million by 2030, growing at CAGR of 5.9%.
There are policies where premium calculations are based on variable factors: worker’s compensation and general liability insurance. There are challenges in handling large complex data sets, changing regulations, integration, and validation with legacy systems, and fraud detection. However, technology gives service providers opportunities to revolutionize the Premium Audit Process. Here are a few emerging technologies that are game changers for the insurance premium audit landscape:
In conclusion, the opportunity for the IT service provider to revolutionize the general liabilities and workers’ compensation premium audit process is immense. By leveraging advanced technologies such as automation, data analytics, mobile applications, cloud computing, and cybersecurity, insurance companies can reduce manual effort by up to 80 %; increase audit output by more than 200 %, increase 4 times in the number of audits per day, and can result into 80- 90 % decrease in the time of audit intake.
Digital Business Services at Happiest Minds.
Veluru Harish, Pooja K C, Ankush Raj, Hanisha V Lokhande Digital Business Services at Happiest Minds.
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