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🔎 '''Underwriting audit''' is a formal review of an insurer's or [[Definition:Managing general agent (MGA) | MGA's]] underwriting files, practices, and decision-making to verify that risks are being selected, priced, and documented in accordance with established guidelines, [[Definition:Binding authority agreement | binding authority agreements]], and [[Definition:Regulatory compliance | regulatory requirements]]. These audits may be conducted internally by the carrier's own audit or quality-assurance team, or externally by a [[Definition:Reinsurance | reinsurer]], a [[Definition:Lloyd's of London | Lloyd's]] managing agent, or an independent third party. The scope can range from a targeted review of a single line of business to a comprehensive examination of an entire [[Definition:Underwriting portfolio | portfolio]].

📂 During a typical underwriting audit, reviewers pull a sample of bound policies and evaluate whether each risk falls within the approved [[Definition:Underwriting box | underwriting box]], whether [[Definition:Rating | rating]] and [[Definition:Premium | premium]] calculations are correct, and whether required documentation — applications, loss histories, [[Definition:Inspection report | inspection reports]], endorsements — is complete and properly filed. Auditors also assess whether [[Definition:Underwriting authority | underwriting authority]] limits have been respected, meaning no individual [[Definition:Underwriter | underwriter]] has bound a risk beyond their sanctioned limit without obtaining the appropriate referral or sign-off. Findings are typically categorized by severity, and significant deviations may trigger remediation plans, retraining, or, in delegated-authority relationships, restrictions on the [[Definition:Coverholder | coverholder's]] binding rights.

🛡️ Regular underwriting audits serve as a critical control mechanism that protects both the insurer's financial health and its relationships with [[Definition:Reinsurance | reinsurance]] partners. Reinsurers, for instance, often include audit-rights clauses in their treaties and [[Definition:Facultative reinsurance | facultative]] agreements, giving them direct access to the cedent's underwriting files. In the [[Definition:Lloyd's of London | Lloyd's]] market, performance management reviews function as a form of underwriting audit at the [[Definition:Syndicate | syndicate]] level, and poor results can lead to business-plan restrictions. For [[Definition:Insurtech | insurtech]] MGAs operating under delegated authority, passing underwriting audits with clean results is essential for maintaining carrier confidence and scaling the book. In this way, the audit process reinforces discipline, catches drift from strategy early, and ultimately supports sustainable [[Definition:Underwriting profit | underwriting profitability]].

'''Related concepts'''
{{Div col|colwidth=20em}}
* [[Definition:Underwriting box]]
* [[Definition:Delegated underwriting authority (DUA)]]
* [[Definition:Binding authority agreement]]
* [[Definition:Coverholder]]
* [[Definition:Quality assurance (QA)]]
* [[Definition:Underwriting guidelines]]
{{Div col end}}

Definition:Underwriting audit - Revision history

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