Many coverholders don’t look forward to their annual audit. Even though most audit procedures are straightforward, it is normal to become harried at the thought of having someone come into your office and assess your most valuable book of business.
Cast aside all doubts, the situation is under control. Read on to find out why many coverholders get audit anxiety and what you can do to overcome it.
Those who fear Lloyd’s audits probably need it the most.
Coverholders that experience a poor audit are usually not surprised by the result. Inconsistent workflows and procedures or staff turnover that causes a disruption in Lloyd’s reporting practices are big reasons why a coverholder is not prepared at audit time.
Problems coverholders often encounter are a combination of unfamiliarity with their binding authority agreements and not creating templates so policy issuance is not standardized.
In addition, manual endorsement issuance often leads to information not being properly included on the renewal documents. If these are being sent directly to clients with no peer review to ensure all endorsements have been declared on renewal, it may lead to an E&O and your auditor will most likely discover that and include it in their audit report.
What happened at your last Lloyd’s audit?
A lot of audit anxiety stems from an unfortunate incident that took place during a previous audit. If it happened before, it will happen again, right? Not exactly. If your auditor is provided proof that a recommendation was addressed, it will be excluded in audits going forward. That way, you won’t be seeing the same recommendations year-after-year.
Another reason for audit anxiety is horror stories coming from employees who may have had a bad experience in the past or at another brokerage. Something that happened 15-years-ago at a completely different brokerage with a completely different auditor has nothing to do with audits taking place now or in the future. The auditor bogeyman does not exist.
What if you’re a new coverholder and have never been audited before? It is completely normal to be an anxious when you don’t know what is going to happen or what to expect. We suggest talking to your auditor in advance. They’re more than happy to answer questions you have and believe it or not, want your audit go as smoothly as possible.
Talk to your Lloyd’s auditor.
It sounds obvious but many coverholders don’t do it. Talking to your auditor is one of the most important steps to take to overcome your anxiety.
An experienced auditor will attempt to reduce your anxiety if they know what your concerns are. With proper preparation, you can be made to understand their process and what to expect, greatly reducing everyone’s anxiety levels, including the auditor.
Find a Lloyd’s auditor that fits in with your culture.
Not all auditors are created equal. If part of the reason why you dislike audits is a personality clash between you and your auditor, it is OK to say so and find an auditor you can build a lasting relationship with. Of course, you don’t want to hurt someone’s feelings, but you have every right to ensure that you’re comfortable with your auditor and are confident in their abilities to audit fairly and accurately.
We hope these tips help you to find the courage to tackle your audit anxiety. Doing so will not only help you become empathetic, it will benefit your brokerage too. Speaking of benefits, contact us to learn how to make Lloyd’s policy issuance and reporting more efficient.