Audit of Insurance

The Audit of Insurance can be demonstrated as the process of monitoring the various domains of the insurance process, including the evaluation of insurance documents, evaluation of liabilities, risk valuation and evaluation of financial statements. Insurance is a type of agreement that citizens of a country make with a company to secure their financial part for the future. The Audit of Insurance is the evaluation of financial statement. Financial statements can be of any type. It is a type of third party assurance to the financial statements of different organisations for proving their reliability. So, the management of insurance statements is an audit of insurance. 

Audit of Insurance 

Audit of insurance is the evaluation process of financial statements passed by the various insurance companies. The Audit of Insurance is the proper examination of risk valuation, liability procedures and other financial statements maintained by the insurance company. 

Audit of Insurance Companies 

Audits of insurance companies are those companies that assure the insurance policies. They check and evaluate whether the insurance rates and the premiums faculties are included in the insurance or not. It also ensures that all insurance companies follow all the laws. All types or previous claims on the insurance company are also considered in the Audit of insurance. It verifies whether the company has excluded previous claims or not. 

Along with all these functions, the Audit of Insurance companies also maintains the relationship between the various policyholders and insurance companies. It provides guidance to the insurance companies on how they can attract more customers and how they can satisfy their customers. 

Audit of Insurance in India 

An insurance company in India is established under the Companies Act of 2013. The insurance is precisely defined under section 12 of the Insurance Act 1938. According to this act, every insurance company needs to audit its financial statements annually. After this, another act was passed in 1999, named the IRDA Act, for modifying it. Under this act, every policyholder, whether the stakeholder or business people, will get a Balance Sheet, separate Profit and Loss Accounts, and separate receipts of every transaction and revenue or payment account. All these sheets are passed at the end of every financial year. Indian insurance company facilitates the following types of insurance: 

• Life insurance
• Business or reinsurance business
• Business or general insurance
• Vehicle insurance 

The Audit Report of the Insurance Company

The audit report of the insurance company is the assurance report that insurance auditors pass. The audit report ensures that the following insurance is secure and covers all the essential aspects of insurance that the government suggests. All the financial statements, important credentials of the holder and company, and liability papers are attached to this report. Policyholders must keep it securely to prevent future scams and frauds. 

Top 4 Insurance Companies in India 

Here are the top 4 insurance companies in India catalogued:

• Life Insurance Corporation of India: It belongs to the government sector, its head office is in Mumbai, founded in 1956
• HDFC Standard Life Insurance Co. Ltd.: It belongs to the private sector, its head office is in Mumbai, founded in 2000
• Max Life Insurance Co. Ltd.: It belongs to the private sector, its head office is in Delhi, founded in 2000
• ICICI Prudential Life Insurance Co. Ltd.: It belongs to the private sector, its head office is in Mumbai, founded in 2000

Important points to be included in the Audit Report of the Insurance Companies

Premium verification 

The Audit of Insurance must include whether the insurance company had included all the premiums in the insurance or not. Along with this, it also checks the capability of insurance companies to bear the risk of insurance. It also checks the charges included by the company in the policy. It evaluates whether the implemented charges are valid or uneven. 

Claim verification 

The Audit of Insurance report should not include any type of previous claims suggested by the previous customer. All types of claims on insurance companies should be rectified or settled. Claim verification ensures that there will be no repetition of previous mistakes. Also, it checks if all charges and policies are well defined in the report or not. 

Commission verification 

The insurance audit must include how much commission will be given to the agent. It means how much the agent collects as a percentage of the premium. It helps prevent any type of misunderstanding between agents or policyholders.

Conclusion 

The Audit of Insurance includes all the essential details that must be provided to the policyholders by the insurance company. However, policyholders also must have to read the Audit carefully before issuing any policy. In 2013, under Section 177, the government of India made it mandatory for all the insurance companies to include all the reports and statements in the Audit of Insurance. It is done under the companies act. So, the Audit of Insurance is the evaluation of all the financial statements, financial reporting, and cash statements included in the Insurance.