This checklist is provided as a guideline for documents that should be requested and maintained in the commercial account file. These documents will differ based on the type of account being written. This checklist is not intended to give any “legal” advice as to how to write or check a policy. The Insurance Community Center/University and authors of this checklist are not responsible for any errors or omissions on the part of the issuing agent/broker/company when issuing this coverage.
PURPOSE OF FILE AUDIT SPECIFICATIONS
The purpose of setting up protocols for file management is to make certain that all the information necessary to underwrite the account is requested, received, reviewed and submitted to the insurance company(s) for substantiation of the risk coverages and limits. Proper document maintenance is the most important procedure that must be implemented and maintained in any insurance office. Often the documentation is stored in a digital format in the agency management systems. However, many insurance offices maintain “hard” copies on certain types of insureds or may not have converted entirely to a paperless environment. All file maintenance documents must be maintained in either hard or digital format in a system that meets the requirements for discovery.
CORE FILE DOCUMENTS TO BE MAINTAINED IN FILE:
- Is the company and principal history in file?
- Are all insureds identified, including past or inoperable entities?
- Is the website address shown in file and reviewed?
- Are the insured’s methods of advertising identified and samples in file?
- Are Broker fees (or service fees) charged? IF YES: are they clearly described to the client with a communication in file that is signed?Yes No
- If any policy is premium financed, are the documents are properly completed and transmitted?
- If the account was placed with a wholesaler, was it an approved wholesaler for the office?
- Is there a Diligent Search document in the file?
- If placed through Agent/Broker surplus lines, are all approvals and signatures in file?
- Are there copies of leases in file?
- Are there copies of all other business contracts in file?
- Are there copies of financial statements? If so, for how many years?
- Are there photos and/or diagrams of buildings or locations to be insured?
- Is there a copy of the loss control program and safety program?
- Is there a copy of the employee handbook?
- Is there a copy of the illness and injury prevention program?
- Is there an Evacuation Plan (larger accounts-- 50 or more employees per location but important for smaller operations, as well?
- Is there a copy of the client’s Disaster Plan (larger accounts)?
- Are there loss runs in file? If so for how many years?
- Was an exposure identification questionnaire used?
- Were their coverage checklists used to identify risk/exposure and limits required? IF YES:
- Are the checklists in file?Yes No
- Was an agent/broker proposal provided on the account? IF YES:
- Is the proposal in file?Yes No
- Is the proposal signed by the insured? Yes No
- If there are any changes on the proposal, are they initialed by the insured?Yes No
- If there were changes, were the changes communicated to the insured by way of a memo maintained in file?Yes No
- Are their agent/broker disclaimers included on the proposal?
- Does the proposal match the company proposal if one was received?
- Does the Policy match the Proposal? This is one of the most important check point items
- Were additional coverage lines offered to the insured? Yes No
- Has TRIA been offered? IF YES:
- Was it accepted?Yes No
- Was it rejected? Yes No
- Is there a marketing spreadsheet in file? IF YES:
- Are all the various company applications in file? Yes No
- Are all the letters of acceptance and/or rejection in file? Yes No
- Have you communicated to the insured in writing (on the proposal) the companies that were submitted to and the result? Yes No
- Are there applications for each line of insurance requested and in file? IF YES:
- Are there copies of any special filings to accompany the application?
- Who was the application completed by? Acct Representative Insured
- NOTE: Some applications MUST be completed and signed by the insured
- IF Business Income is applied for, is there a Business Income Worksheet in file? IF YES:
- Who completed the worksheet: Insured CPA Acct Rep
- Are there current financial statements in file? Yes No
- How many years of financials are maintained in the file?
- If Property Insurance is being applied for, is there a Statement of Values form (SOV) in file? IF YES:
- Who completed the SOV? Insured CPA Acct Rep
- Who signed the SOV? Insured CPA Acct Rep
- On the SOV, which of the following is identified?
Limits Valuation Occupancy Lender / Yes / No
- Was the coverage bound? IF YES:
- Is there an authorization to bind form received from the insured and in file?
- Who issued the binder? By Agent/Broker: By Wholesaler:
- Was an Evidence of Insurance Form used instead of a binder?
- Does the Binders/Evidence of insurance show the proper deductibles and/or retentions?Yes No
- Is there a coverage summary in file? IF YES:
- Does the coverage match the coverage issued? Yes No
- Are the policy restrictions and warranties identified on the coverage summary?Yes No
- Are any of the policies auditable? IF YES:
- Identify type of policy: Copies of final audits?
- If Workers Compensation is offered/written, does the file contain an Ex Mod Worksheet?
- Is the WCIRB # indicated?Yes No
- Is the NCCI # indicated?Yes No
RECOMMENDATIONS:
Reviewed by: / Date:
Copyright 2012 Insurance Community Center - Materials created by Marjorie Segale (Segale Insurance Consulting) –and Laurie Infantino, Insight Insurance Consultants
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