Insurance

Control Objectives for Insurance

(a) To ensure that all relevant business and operational risks are accurately
assessed as the basis for providing adequate and appropriate insurance cover;
(b) To ensure that prevailing insurance cover would either remove, reduce or
minimise risk exposures as appropriate;
(c) To ensure that insurance cover arrangements are justified and authorised;
(d) To ensure that insurance costs represent value for money and are
competitive, effectively monitored and contained;
(e) To ensure that insurance arrangements are made through competent,
reliable and stable brokers/companies;
(f) To ensure that insurance cover is renewed when appropriate and remains
current;
(g) To ensure that claims are reviewed, agreed and authorised prior to
release;
(h) To ensure that insurance claims are valid, correctly costed and pursued
with the insurers until settled;
(i) To ensure that insurance claims are controlled to prevent excessive levels
and the potential for increased premiums;
(j) To ensure that insurance arrangements comply with all the applicable legal
and regulatory requirements; and
(k) To ensure that measures designed to reduce risks and related insurance
costs are assessed, justified and authorised.

Risk & Control Issues for Insurance

1 Key Issues

1.1 How does management ensure that all insurable risks are identified,
assessed and adequately covered?
1.2 What processes ensure that the levels and types of insurance cover
are appropriate and adequate?
1.3 Are insurance arrangements subject to prior authority, and what
mechanisms prevent the establishment of invalid, unauthorised or
unnecessary insurance arrangements?
1.4 How does management ensure that insurance costs are competitive
and represent value for money?
1.5 What processes ensure that all insurance arrangements are arranged
with suitable and reliable insurance institutions?
1.6 How can management be assured that the required insurance cover
is current and in force?
1.7 Are insurance claims subject to appropriate assessment and
authority prior to submission?
1.8 How can management be sure that all insurance claims are
appropriately costed and eventually settled?
1.9 How does management ensure that suitable insurance cover is
obtained for all areas where it is required by law (i..e for employer liability
and motor vehicles)?
1.10 What measures are in place to monitor and assess methods of
reducing risks and their impact upon insurance costs?

2 Detailed Issues

2.1 Are new or modified business operations adequately assessed for their
inherent risks, and how can management be certain that the prevailing insurance
arrangements remain suitable and adequate?
2.2 What mechanisms prevent the continuation of unwanted, uneconomic or
unwarranted insurance arrangements?
2.3 Is current insurance cover available for the following areas (as applicable):
- Employers liability;
- 3rd party;
- buildings/premises;
- Equipment/Plant;
- Key assets;
- I T Equipment;
- Vehicles;
- Interruption/loss of business;
- Stocks.
2.4 Are payments of all insurance premiums (including renewals) suitably
authorised?
2.5 Are insurance renewal premiums subject to review and authorisation?
2.6 What mechanisms prevent the automatic renewal of insurance premiums
where the cover is no longer valid or required?
2.7 Are brokers fees subject to authorisation prior to payment?
2.8 What mechanisms prevent the arrangement of insurance cover with
unreliable or financially unstable insurance companies?
2.9 Are small or uneconomic claims prevented in order to avoid the potential
for increased renewal premiums?
2.10 Are all claims based upon realistic, accurate and legitimate cost data?
2.11 Are policy documents scrutinised for inappropriate conditions or
unreasonable exclusion clauses (and what action would be taken in such
instances)?
2.12 What measures ensure that the proceeds from all insurance claims are
identified and correctly accounted for?
2.13 Are certificates of insurance obtained, securely stored and/or displayed
when required by the prevailing regulations?
2.14 Are adequate, accurate and up-to-date records of all current insurance
policies maintained?
2.15 How can management be assured that the status of all insurance cover can
be promptly and accurately determined?
2.16 What processes ensure that all the prevailing laws and regulations are fully
complied with?
2.17 How is the accuracy of data input from other systems (i.e. Risk
Assessment or Fixed Assets) confirmed?
2.18 How is the accuracy of data output to other systems (i.e. to the general
ledger) confirmed?