The process of insurance premium auditing has changed drastically over the years, and continues to evolve alongside new technology. Being familiar with how auditing has transformed is useful to deepen one’s understanding of the process.
In the past, insurance carriers conducted audits to determine the insurance premium. An audit is the only method of identifying the premium, as this type of insurance is based on estimates. Insurance carriers would calculate the premium based on estimates of insurance exposure, which encompasses estimated payroll, business operations and losses/mod.
This method led to many over and underestimates, which proved costly for businesses. If an estimate is too low, the business would receive a bill for the additional premium. On the other hand, if the auditors overestimate the premium, the business would receive a refund. It is estimated that 25-50% of businesses with insurance policies may have been overcharged at some point during the audit. Incorrect estimates can be a hefty blow to businesses, so new methods of auditing seek to reduce excess costs for businesses.
AI is a technology that is revolutionizing insurance premium auditing. For example, AI offers paradigm shifts, flexible visits, and predictive analysis, all of which help auditors streamline the process. More specifically, AI helps auditors detect anomalies, boost data accuracy and reduce the likelihood of inaccuracies.
Technology such as AI helps to make insurance premium auditing a less costly endeavor for businesses, and will continue to shape the auditing process. Using new services can help businesses avoid excess charges, and is a good option moving forward.
