Auditing Case Studies
InsuranceRescue has completed thousands of profitability and process audits. Just a few of our findings are below:
- Over 20% with operational and underwriting errors
- Over 18% required significant corrective actions
- Discovered numerous Expert System problems and errors
- Uncovered hundreds of improperly rated policies
- Recovered thousands in lost premium revenue due to improper insurance to value (ITV)
- Improved underwriting and processing guidelines with IR research and benchmarking
- Two casestudies are shown below
A national insurer, XYZ Insurance Company's financial results were unacceptable. Aggressive pricing actions had improved loss ratios, but not to the level expected by management. These pricing actions were also negatively affecting new production and client retention. As a result, XYZ contracted IR for profitability and premium leakage audits.
The first phase of the project was to review and validate automated system referrals and underwriting handling. Our team pulled and reported on 900 active referral policies plus an additional 100 suspect, non-referral policies.
What we discovered?
- Automated underwriting referrals were not firing as expected or as documented. As a result the company was writing policies for which they did not have nearly adequate rates
- Policies were incorrectly referred to underwriting (adverse impact on workflow)
- State rate (pricing) manuals and guidelines were out of sync with underwriting decisions
- Underwriting guidelines were being interpreted differently by underwriters throughout numerous regions
IR was able to validate that approximately 80% of policies audited were properly priced. For XYZ, price increases alone had not been a panacea for improved results because underlying processes and decisions were not followed. Without this audit, XYZ may not have discovered these problems for years.
ABC Insurance Company was piloting a new sales channel. The company created a detailed operations manual which included specific steps for all work and processes handled by staff. Management expected this pilot to be equally or more efficient than current channels and more easily replicated.
During the pilot’s development phase, ABC’s management recognized the importance of validating all operations manual steps through process audits.
InsuranceRescue was contracted to build process audit procedures based on the operations manual and then to complete quarterly file audits and agency training.
What we discovered and did
- Documented actions being missed and forgotten by staff members.
- InsuranceRescue and ABC’s internal team completed additional training and built new checklists until the new processes became second nature to the employees.
- After InsuranceRescue's audit support, ABC implemented internal quarterly audits to assess efficiencies and compliance with the new processes.
Remember that outsourcing your quarterly audits is affordable, will ensure compliance and allows management to focus on other critical priorities.