Insurance auditors while conducting insurance audits will review credit policy and procedures, tax records, risk assessments, and other financial records of insurance. This is done to ensure that appropriate insurance standards and premiums are applied and that insurance companies adhere to the rules. Some of the key areas to be considered during insurance audits are claims and commissions. In addition, insurance auditors must also maintain quality control between insurance companies and policyholdersInsurance auditors while conducting insurance audits will review credit policy and procedures, tax records, risk assessments, and other financial records of insurance. This is done to ensure that appropriate insurance standards and premiums are applied and that insurance companies adhere to the rules. Some of the key areas to be considered during insurance audits are claims and commissions. In addition, insurance auditors must also maintain quality control between insurance companies and policyholders Meaning of Indian Insurance Company The Companies Act, 2013 requires the registration of an Indian insurance company. A foreign company’s overall holdings of equity shares, whether held directly or through subsidiary companies or nominees, shall not exceed 26% of the insurance company’s paid-up equity capital. The major purpose of an Indian Insurance Company is to do life insurance, general insurance, or reinsurance operations. While conducting insurance audits, insurance auditors must evaluate policy and liability processes, tax papers, risk appraisal, and other financial records of insurance. This is done to guarantee that suitable insurance rates and premiums are imposed and that insurance businesses adhere to regulatory requirements. Claims and commissions are two of the most important areas to verify during insurance audits. Additionally, insurance auditors must maintain quality control between insurance companies and policyholders. Insurance Audit and Role of Insurance Auditor Every insurer’s financial accounts must be yearly audited by an auditor as required by Section 12 of the Insurance Act, 1938. By the regulations established by the IRDA after each financial year, every insurer is required to prepare a balance sheet, a profit and loss account, a separate account of receipts and payments, and a revenue account concerning the insurance business he transacts and the funds of his shareholders. An insurance company’s central and branch auditors are chosen at the annual general meeting of the business, with the consent of the C & AG needed before the appointment is made. The Insurance Act of 1938 and the Companies Act, 2013 have recently been amended, and the Insurance Regulatory and Development Authority of India (IRDAI) has released updated recommendations requiring insurers to adhere to the Companies Act, 2013 provisions regarding the appointment of auditors. In addition, insurers must follow the rules outlined in these recommendations. The Board will designate the statutory auditors by the Audit Committee’s proposal, subject to the approval of the shareholders at the annual meeting of an Indian insurance company. The statutory auditors to whom they are required to submit their report have the same rights and duties as the branch auditors authorized to undertake the audit of the divisions. However, the branch auditors at the divisional level attested that the financial statements of the branches within the divisions were properly included in the division’s trial balance. An insurer cannot remove its statutory auditor without the Authority’s prior consent. More than three insurers (life, nonlife, health, and reinsurer) cannot have their audits accepted by the same auditing company at once. If it is discovered that the insurers’ appointment of auditors does not follow the rules, the appointment may be canceled. Meaning of an Insurance Audit In terms of Section 12 of the Insurance Act, 1938, the financial statements of all insurers must be audited annually by the auditor. As determined by IRDA, 1999, all insurers in respect of their insurance business and shareholders’ funds must provide: Balance Sheet Profit and Loss Account Different Receipts Account Payments and Income Account All of this must be done following IRDA rules at the end of each financial year.An insurance audit is an independent audit of accounting records that reflects the expert’s opinion on its accuracy. Key Points examined during the audit of Insurance Companies Premium Verification: In a separate bank account, premium collections are credited. No withdrawals are usually allowed on that account for general expenses. As stated in the insurance company policy, the collection is forwarded to the Regional Office or Head Office. In terms of Section 64VB of the Insurance Act, 1938, the insurer will not take the risk without receiving a premium. The auditor needs to confirm the premium because the insurance premium is collected when the policies are issued. It is a consideration to bear the risk of the insurance company. The Auditor-General will apply the following procedures: Before initiating the payment of revenue, the auditor must consider internal controls and compliance rules, which are set for the collection and recording of premiums. Cover notes should be numbered sequentially. The auditor needs to check how the premium registers are maintained chronologically, providing full details including the GST charged in terms of daily admission advice. The auditor must verify that he or she has received the amount stated in the register and those indicated in the general record. The auditor shall also ensure that the installments payable on or before the date of receipt of the balance are calculated as revenue for the year under review. Claims Verification: The auditor of each division or branch should have access to information for all categories of business. The Auditor-General shall determine the total number of documents to be inspected, giving due consideration to high-value claims.The claim account is deducted from all payments including repair costs, survey fees, photographic costs, etc. The Auditor-General will: Check the provision of non-adjustable claims. Check whether the provision is made for those applications that the company is legally responsible for. Check that the provision is not higher than the insured amount. Check out Co-insurance programs; the company has made provisions in respect of its expected credit allocation. Verification of Commission: The agent’s salary is determined by the commission. Remuneration is calculated using the percentage of the proceeds collected by the agent.The commission is
