Chapter 9 - External Audits Flashcards
What is the impact of an audit by the OFSI can have on an insurer
They Check the rating of the insurer which does the following:
Identify any significance activity that could threaten the financial soundness if not managed properly.
Review the lines of business the Insurer is writing
Review rating in relationship to the insurers operations and strategy
in addition:
Examines effectiveness of measures to manage risk
Review day to day functions like: Financial analysis, compliance, internal auditing and risk management
The insurer may have to adjust its strategy, increase capital, retrain staff etc. in order to be compliance with legislation and regulations of that province
Describe what a provincial regulator would consider in determining which audit approach to use to regulate an insurer
solvency
regulation and legislation compliance
underwriting guidelines
customer compliants
Discuss what would typically be addressed in a provincial market conduct review and in a provincial solvency review
if provincially incorporated, then province is responsible for solvency and compliance
If federally incorporated, province does conduct review and OFSI does solvency
what is purpose, scope and benefit of
Facility Association audit
FA audits servicing carriers and members for adherence to Association standards. Look to ensure underwriters use property forms and eligibility criteria. deadlines are met, and all required documents ar eon file
Scope: Audit the records of any member insurer (books, policies, records
Benefit: if the Fa determine the Servicing carrier is out of compliance it has the power to investigate further and call for an full audit
what is purpose, scope and benefit of
Outside Consultant Audit
Consulting firms look to do the following:
review functional areas such as U/W
look to see if there is any premium leakage
compare the U/W practices against industry best practices
Insurers call consultants to prepare a share offerinings or to audit one of the carriers current or prospective servicing carriers and to perform due diligence review, and to assist with product design and pricing.
Services can be broad or narrow in scope depending on what objectives are:
Reports will be made for Senior Management to look for areas of improvement.
what is purpose, scope and benefit of
Resinsurance Audits
Purpose: A treaty contract includes the right for the reinsurer to inspect the insurer’s books, review claims and u/w files
Scope: Updating the client file with any significant changes in Staffing, or changes in processes, types of business, types of producer etc
Benefit: Can be used a training tools as they can identify areas of strength and weakness and provide recommendations. . Benefit is it protects the Resinsurer.
