What is a primary goal of conducting an 'underwriting audit'?

Conducting an underwriting audit primarily aims to evaluate the effectiveness of underwriting practices. This assessment is essential in ensuring that underwriting processes are aligned with the organization's guidelines and standards.

An underwriting audit reviews the decisions made by underwriters and the reasons behind those decisions. By examining case files, reviewing risk assessments, and checking compliance with internal policies, auditors can identify strengths and weaknesses within the underwriting process. This information helps improve future underwriting practices, enhance risk assessment accuracy, and ultimately contribute to better overall risk selection.

The focus on evaluating effectiveness rather than processing claims or setting premiums highlights the audit's role in maintaining a robust underwriting framework, ensuring that the company can mitigate risks and maintain profitability. This proactive approach enables underwriters to adjust their techniques and strategies based on the audit findings, fostering ongoing improvement in underwriting effectiveness.