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Published byMoses Whitehead Modified over 9 years ago
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INTERNATIONAL BEST PRACTICES IN ON-SITE INSPECTIONS OF INSURERS Thomas E Power Senior Manager, Emerging Market Practice Bearing Point
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RATIONALE FOR ON-SITE INSPECTIONS Virtually all regulatory authorities conduct on-site inspections It differs from an independent audit in that it is addressed to the chief regulator; applies accounting rules established by the regulator; and determines financial condition (as opposed to merely reporting on the material fairness of insurer’s financial statements
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RATIONALE FOR ON-SITE INSPECTIONS (contd..) Also determines the insurer’s compliance with law It is risk-based in that it also reports on the insurer’s ability to meet its obligations both presently and prospectively Does not necessarily duplicate the work done by the auditors – it supplements the work and relies on it where prudent
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The On-Site Inspection Process Planning the Annual Inspection Program Many countries have adopted regular cycles Regular inspections and targeted and expedited inspections Consultation with all departments in the agency Coordination of some activities with the work of the independent auditors
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The On-Site Inspection Process (contd..) Planning for Individual companies Determine the team Planning meeting with all concerned divisions Conduct a triage of risk (i.e. ranking the various items by priority) Inform the company of the inspection date Convene pre-inspection meeting with company
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Procedures During the Inspection Assignment and monitoring of team Meetings with team for progress reports Regular meetings with senior management Documentation through detailed working papers Security! Regular reports to person in charge of inspections
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Concluding the Inspection The Report Summarizing findings Assuring complete documentation Recommending any follow-up procedures
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International Systems Use of Independent or contract auditors under control of the supervisory authority Scheduling of inspections only on an “as needed” basis Mandatory regularly scheduled inspections Inspection reports public or confidential Opportunity for administrative hearings
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Inspection Tools Early Warning System Reports of off-site inspections Complaints Software programs to speed procedures
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