When people think of auditing, they often imagine a team of IRS agents storming into the office and demanding massive compilations of tax-related documents. However, audits–especially self-imposed audits of operations and internal processes–can be so much more meaningful.
Internal audits are a way to review areas where your operations are thriving and where you can streamline systems to achieve greater efficiency and profitability. Insurance is an industry based on the idea of being “better safe than sorry.” Internal operational audits can uncover opportunities to tighten up your business before you’re faced with an operational crisis.
If you haven’t conducted an audit lately, here are three reasons to get moving right away.
Reason 1: Compliance, Compliance, Compliance
In an industry as highly regulated as insurance, this is the most obvious reason to conduct an operational audit. Compliance must be taken seriously. Whether you’re an insurance company, MGA, licensing agent, broker or provider of any other insurance-related service, you are subject to a long string of regulations up and down the chain of command.
State statutes for rates and forms, federal statutes for the same, privacy rules, disclosure rules, information sharing, guidelines for proper use of credit, protection of social security numbers, bank transfers, matters covered by the Gramm-Leach-Bliley Act, rules governing methods and means of communication – all create a minefield of potential regulatory pitfalls.
Each of these processes faces scrutiny by some regulatory body. Operate in violation of any of these regulations and you put your organization at risk for hefty fines or the suspension–or even loss of–license or certificate of authority. An audit by insurance operations consulting experts will reveal areas where you are out of compliance so you can correct those immediately.
Reason 2: Expose Leakage
Operational audits can reveal ways your company is suffering from various forms of leakage– that is, areas where you’re bleeding money of which you are currently unaware. This can be anything from late-paying customers who cause you to miss out on the benefit of interest to unscrupulous or lackadaisical employees who are gaming the system.
When you conduct an audit, either internally or with the help of insurance operations consultants, you confirm that your organization is already using the most effective processes. Or, you reveal areas where you can shore up your operations to reduce unnecessary overspend and make sure you’re collecting everything that is due in a timely manner.
Reason 3: Keep Pace with the Marketplace
Auditing your operations gives you the opportunity to review whether you are keeping pace with not just your competitors, but the marketplace as a whole. Who are your core customers? Who will they be in 25 years? Are your operations and processes geared toward millennials and how they expect to communicate, pay, file a claim and take out a new insurance policy? An operational audit enables you to uncover these trends and determine if your current business trajectory is set to evolve with your clientele, or if your operations are fixed while your customer-base changes.
You can assign an in-house team to audit your operations, but it’s usually a smarter move to work with an insurance operations consulting firm who can look at your business with fresh eyes. An unbiased third party can reveal areas for improvement that might not be obvious to internal teams.
No matter who you decide should perform the audit, it’s a small investment that can pay off huge in revenue increases and protection from expensive fines.
If you’d like to know more about how an operational audit can help your business, contact us today.