What is the purpose of an insurance premium audit?

The purpose of an insurance premium audit primarily revolves around ensuring that premiums are accurately assessed based on the actual risk and exposures associated with a policyholder. This audit process involves reviewing the policyholder's operations, financial reports, and other relevant data to confirm that the premiums charged reflect the true level of risk they present.

In essence, a premium audit helps insurance companies adjust the premium amounts according to real-world conditions and exposures after a policy period, rather than relying solely on estimates that were used to establish the initial premium. This can involve reassessment of factors such as payroll, sales figures, or other metrics that might impact the level of risk the insurer assumes.

While other aspects like future claims costs, customer satisfaction, or the company's financial status are important in the broader context of insurance operations, they are not the direct objectives of a premium audit. The main goal is to ensure fair pricing and maintain the integrity of the underwriting process.