Data analysis in insurance business



Quick Summary
Data analysis is crucial for insurance companies to effectively manage risks and protect themselves. By analysing customer data, insurers can gain insights into applicant risk. This article explores specific data analysis procedures applicable to insurance audits, covering areas like premium accuracy, claim validity, and fraud detection. It also outlines the essential data needed from clients to perform these analyses.

When we discuss about risk, the focus is generally on the insurer to takes insurance to mitigate their risks. It is imperative that insurers must also protect themselves. In the process the insurers collect variety of data from the personal details to the credit worthiness of their customers. For effective risk management, it is important to analyse the data available with the insurer and also for the auditor who audits an insurance company. The audit risk arises as many insurance policies are based on estimation when underwritten. Data analytics provides the auditor with an insight to identify and assess the risk of each applicant. In this article, we would discuss some data analytics procedures which can be applied while taking up Insurance audit assignments.

Data Analysis across the files

  1. Existence of policy in the same period as the claim
  2. Checking details between claims and policy
  3. New policies experience claims shortly after inception
  4. Identification of unadjusted credits in cash deposit account
 

Premium

Audit objectives

  1. Accuracy of premium collected
  2. Authorizing of discounts offered
  3. Justifying policies cancelled shortly after inception
  4. Accuracy of penalty levied in case of repetitive past claim history

Data Analysis for the above objectives

  1. Stratify the premium by size and product type
  2. Summarize new business by agent or area
  3. Summarize debts by agents
  4. Exception test: Extract old premium due on policies that have not lapsed
  5. Identify policies that were cancelled soon after inception
  6. Extract negative debts
  7. Identify unallocated cash
  8. Extract policies with blank or invalid policy numbers
  9. Identify policy premium that have only been part-paid
  10. Direct debits that have not been collected
 

Claims

Audit Objectives

  1. Establishing the validity of the claim
  2. Validating close proximity claims
  3. Justifying operational delays in claim settlement
  4. Accuracy of agency commission
  5. Settlement of claims on policies underwriting risk of stolen motor vehicle

Data Analysis for the above objectives

  1. Analyse by month & type and calculate average values
  2. Group claims by product type
  3. Matrix analyse date of the incident to date claim reported as part of assessing claims incurred but not recorded.
  4. Exception tests: Identify claims with no movement during the last 6 months (some claims get reported but queries on the claim are not responded to leaving old expired claims on the system)
  5. Identify negative balances (recoveries)
  6. Identify the duplicate claims (same policy number - same policy amount - same date of incident)
  7. Check for multiple claims on the same policy

Review of the Fraud areas - Emphasis on the Health Care fraud

Audit objectives

  1. Excessive procedure billing of same diagnosis, same procedures
  2. Identify excessive number of procedures per day or place of service per day / per patient
  3. Identify multiple billings for same procedures, same date of service
  4. Analyse for mismatched services to diagnosis codes
  5. Review diagnosis fees in excess of masters
  6. Review procedure fees in excess of masters
  7. Identify and report diagnosis and/or treatment that is inconsistent with patient’s age or gender

Data to be obtained from the client for the above analysis

  1. Premium Report
  2. Cancelled policy report
  3. Cover note report
  4. Premium master for various policies
  5. Discount master
  6. Policy number report for rolling policies
  7. Agent commission report
  8. Commission master
  9. Claim report
  10. Incurred loss summary report
  11. Incurred loss report - Agent wise

2513 Views 1 Likes Comment   Share Corporate Law   Report


About the Author

Audit & Assurance

Risk analysis and management Audit Assurance

Comments :

Related Articles


Loading


Popular Articles





CCI Pro

CCI Articles

submit article


Company
ARTICLESHIP 23 October 2026
CA Articleship / Article Assistant

M N Rao & Associates LLP

Vijayawada

CA Inter

View Details
Company
ARTICLESHIP 29 October 2026
Article Assistant (CA Inter / CMA Inter) - Thrissur

Varma Raja & Associates

Thrissur

CA Inter

View Details
Company
28 October 2026
Assistant Director/ Associate Director-Finance & Accounting

Krea University

Chennai

CA

View Details
Company
30 October 2026
Asst Manager Accounts

Goodwin Pumps India Pvt Ltd

Chengalpattu

CA Inter

View Details
Company
19 October 2026
Accountants/Articles (Freshers/Experienced)

ADY & CO.

New Delhi

Graduate (Any)

View Details
Company
Featured ARTICLESHIP 31 October 2026
CA Articleship

apricus india

Navi Mumbai

CA Inter

View Details
Company
ARTICLESHIP 07 November 2026
Article Assisstant

DPV & Associates

Chennai

CA Inter

View Details
Company
Featured ARTICLESHIP 28 October 2026
CA- Inter and Articles

N N V Satish & Co.,

Hyderabad

CA Inter

View Details