Audit

What Does Audit Mean?

An audit is the process in which one party examines the financial records or other documents of another party to verify specific information. In the context of insurance, insurance companies routinely audit policyholders to ensure that the information they have provided is accurate and up to date.

Insuranceopedia Explains Audit

The accuracy of a policyholder’s information can have significant implications for the insurer. For instance, in workers’ compensation insurance, a higher number of employees increases the likelihood that an employee will need workers’ compensation benefits. As a result, workers’ compensation insurers often audit their policyholders to ensure the accuracy of their information. Specifically, they focus on payroll data, as it largely reflects the number of employees working for the company. Similarly, general liability insurance and certain marine policies are also frequently audited.