Becoming An Insurance Auditor: Steps To Take

If you're interested in a career that combines accounting, auditing, and insurance, you might want to consider becoming an insurance auditor. Insurance auditors, also known as premium auditors, review business documents and financial records to ensure compliance with regulations, accuracy, and fairness. They also help to identify and prevent fraud, waste, and abuse in the insurance industry. To become an insurance auditor, you typically need a bachelor's degree in a related field such as accounting, finance, or business, as well as relevant work experience and certifications.

Get a bachelor's degree in accounting, business, finance, or statistics

To become an insurance auditor, you will typically need a bachelor's degree in a relevant field such as accounting, business, finance, or statistics. Obtaining a bachelor's degree usually takes four years, and during this time, aspiring insurance auditors will learn about financial principles, business operations, and accounting procedures. They will also develop analytical, problem-solving, and decision-making skills.

A degree in accounting will provide a strong foundation in economics, mathematics, and finance, which are all necessary qualifications for the job of an insurance auditor. Courses in ethics, insurance law, accounting, and finance are also common requirements for a degree in this field. While pursuing your degree, it is beneficial to gain experience through internships or other work opportunities.

A degree in business will provide a solid understanding of business operations and management, which are crucial for insurance auditors as they often conduct audits, manage office operations, and schedule appointments. Courses in business law, accounting, finance, and business ethics can also provide a strong foundation for a career in insurance auditing.

A degree in finance will equip you with knowledge of financial principles, investments, and economics, which are all essential aspects of insurance auditing. Understanding the financial health of a company and assessing risk are key components of an insurance auditor's role. Courses in financial analysis, risk management, and insurance will provide a strong foundation for this career path.

A degree in statistics will provide a strong foundation in data analysis and interpretation, which are crucial skills for insurance auditors. Insurance auditors often analyse large amounts of data, including financial records, to identify patterns, calculate risk, and ensure compliance with regulations. Courses in economics, mathematics, and finance can also complement a degree in statistics and provide a well-rounded education for aspiring insurance auditors.

Gain work experience in auditing, risk assessment, or insurance

Gaining practical work experience in auditing, risk assessment, or the insurance sector is a crucial step towards becoming an insurance auditor. This phase typically lasts for about two years, following the completion of a bachelor's degree. During this time, aspiring insurance auditors can develop a range of skills and gain valuable insights into the industry.

One key aspect of this work experience step is learning how to review financial records. Insurance auditors need to be adept at analysing financial documents, such as payroll and financial statements, to assess costs and ensure that insurance companies are fairly compensated for their risk exposure. This involves understanding financial principles and accounting procedures, as well as developing strong analytical skills for interpreting financial data.

In addition to financial record review, gaining work experience in auditing, risk assessment, or insurance will also expose aspiring insurance auditors to the process of assessing risk. This includes evaluating client details, analysing data and trends, and making informed recommendations to mitigate risks for the company. Insurance auditors must also ensure compliance with laws and regulations, so a solid understanding of insurance laws and how they apply in the real world is vital.

Effective communication skills are also honed during the work experience phase. Insurance auditors regularly interact with clients and stakeholders, so it's important to develop clear and concise communication skills. This may involve learning how to explain complex financial concepts to clients or how to effectively collaborate with colleagues to resolve issues.

Furthermore, gaining practical experience in the field allows aspiring insurance auditors to develop their problem-solving and decision-making abilities. They will encounter real-world challenges and learn how to navigate them, whether it's identifying discrepancies in financial records or making informed decisions about premium adjustments.

Overall, the work experience phase is a vital step in the journey towards becoming an insurance auditor. It provides future insurance auditors with the practical knowledge, skills, and industry insights that will form the foundation of their careers.

Develop analytical, communication, and problem-solving skills

Analytical skills are highly valued by employers, as they allow employees to think on their feet, solve complex problems, and make rational decisions. To develop your analytical skills, you can:

• Read more frequently, as this will help keep your mind active and force your brain to think in new ways.
• Build your mathematical skills, as all forms of mathematics involve solving equations in a logical, step-by-step manner.
• Play brain games, such as Sudoku or crossword puzzles, as these require deep and logical thinking in an entertaining format.
• Learn something new every day to expand your knowledge and give you more tools to solve problems and analyse situations.
• Be more observant and pay attention to detail, as this will help you process how things work and interact.
• Join a debate club or group discussion setting to understand how others interpret and process information.
• Take an exercise class, as memorising the sequence of movements in a workout routine will help you stay focused and prepare for what's next.

Communication skills are also essential in the workplace, as they allow leaders to convey information clearly and effectively to employees, teams, and across the organisation. To improve your communication skills, you can:

• Be clear and concise in your communication, choosing your words carefully and avoiding unnecessary or flowery language.
• Prepare ahead of time by knowing what you want to say and how you want to say it, and anticipating questions or criticisms.
• Be mindful of nonverbal communication, such as facial expressions, gestures, and body language, which can have a stronger impact than spoken words.
• Practice active listening by giving the speaker your full attention, clearing your mind of distractions, and avoiding interruptions.
• Build your emotional intelligence to understand and manage your own emotions, as well as empathise with others.
• Develop a workplace communication strategy that outlines how and what information is communicated to different stakeholders.
• Create a positive organisational culture based on transparency, trust, empathy, and open dialogue to facilitate effective communication.

Problem-solving skills are highly sought after by employers, and a systematic approach can help you find sustainable solutions. To become a better problem solver, you can:

• Identify the problem by thoroughly reviewing the situation and separating the symptoms from the root causes.
• Determine the root causes by collecting information, analysing your findings, and refining your diagnosis.
• Find multiple solutions by thinking innovatively and considering a wide range of ideas and perspectives.
• Select the best solution by considering technical viability, available resources, risks, benefits to stakeholders, and measurability.
• Plan and implement your solution by considering the who, what, when, and how of executing your plan.
• Measure the success of your solution against your goals, objectives, budget, and expected outcomes.
• Be prepared to get it wrong and learn from your mistakes, as effective problem-solving involves trial and error.

Earn certifications like Certified Insurance Premium Auditor (CIPA) or Certified Fraud Examiner (CFE)

Obtaining certifications like the Certified Insurance Premium Auditor (CIPA) or Certified Fraud Examiner (CFE) can be a significant step towards becoming an insurance auditor. These certifications not only demonstrate expertise but also show commitment to the field. Here is a detailed guide on earning these certifications:

Certified Insurance Premium Auditor (CIPA)

The CIPA certification is a testament to your skills and knowledge in insurance premium auditing. This certification is highly regarded in the industry and can open doors to numerous opportunities. To be eligible for the CIPA certification, you must meet specific requirements:

• Experience: A minimum of three years of auditing experience is required. This experience should involve conducting regulatory field audits.
• Education: Candidates must have successfully completed specific examinations, including APA 91, APA 92, CPCU 552, CPCU 540, and either CPCU 551 or CPCU 520. These examinations cover various topics, such as principles of premium auditing, auditing applications, commercial liability risk, and insurer financial performance.
• Ethics: Adherence to ethical standards is crucial. Candidates are required to sign the NSIPA (National Society of Insurance Premium Auditors) Code of Ethics, demonstrating their commitment to ethical conduct in their professional endeavours.
• References: As part of the application process, you will need to provide three professional references. These references should speak to your character and professional skills, providing a well-rounded perspective on your capabilities and suitability for the CIPA designation.

Certified Fraud Examiner (CFE)

The CFE credential is a globally recognised mark of excellence for professionals specialising in fraud examination and prevention. The process of obtaining the CFE certification is rigorous and designed to equip you with the knowledge and skills to tackle fraud effectively. Here's a step-by-step guide to earning the CFE credential:

Step 1: Join the ACFE (Association of Certified Fraud Examiners)

Becoming a member of the ACFE is the first step towards earning your CFE credential. This membership grants you access to exclusive benefits, resources, and a global network of anti-fraud professionals. The ACFE is committed to supporting you throughout your journey towards becoming a Certified Fraud Examiner.

Step 2: Prepare for the CFE Exam

With your ACFE membership in place, it's time to dive into preparation for the CFE Exam. This exam will test your knowledge and understanding of fraud, including how it occurs, the reasons behind it, the perpetrators, and, most importantly, how to detect and prevent it. You can choose from various study options, including self-paced online learning, instructor-led classroom settings, or self-directed study using the comprehensive Fraud Examiners Manual.

Step 3: Apply for the CFE Exam

To be eligible to take the CFE Exam, you must meet specific requirements. These requirements are assessed using a points system, and you can use the Eligibility Calculator on the ACFE website to determine your eligibility. Additionally, you will need to provide documentation, including details of your professional work experience, proof of education, and professional recommendations.

Step 4: Take the CFE Exam

The CFE Exam is a comprehensive assessment consisting of four sections: Financial Transactions and Fraud Schemes, Law, Investigation, and Fraud Prevention and Deterrence. Each section is a two-hour, closed-book exam with 100 multiple-choice and true/false questions. To pass, you must correctly answer at least 75% of the questions in each section. The exam can be taken either remotely or at an in-person testing centre.

Step 5: Get Certified

Once you have successfully passed all four sections of the CFE Exam, your application, exam results, and proctored exam sessions will be reviewed by the ACFE's Certification Committee. Upon meeting all the qualifications, you will receive an email notification, and your CFE certificate will be mailed to you within a few weeks.

Earning these certifications, such as the CIPA or CFE, is a testament to your expertise and dedication to the field of insurance auditing. They not only enhance your credibility but also open up a range of career opportunities and the potential for higher earnings.

Stay up-to-date with insurance laws and regulations

To stay up-to-date with insurance laws and regulations, insurance auditors can take continuing education classes to keep track of any changes that may affect their work or the industry. They can also maintain communication with experts in the field to stay informed about changes in the industry.

Insurance auditors must be aware of the regulatory authorities and procedures that govern the insurance industry. In the US, for example, insurance is regulated by both state and federal governments. Each state has its own laws and requirements for insurance businesses, while the federal government has a more modest role due to the McCarran-Ferguson Act of 1945, which gives states primary authority over insurance regulation.

State regulations cover areas such as insurance rates, licensing of insurance companies and brokers, financial examinations of insurers, and consumer support. State insurance regulators are also part of the National Association of Insurance Commissioners (NAIC), which works to standardise insurance regulations across states.

Federal regulations come into play in cases of interstate insurance commerce. For instance, the National Association of Registered Agents and Brokers Reform Act of 2015 simplified the process for non-resident insurance sellers to operate across state lines. Additionally, federal regulators can classify insurers as Systemically Important Financial Institutions (SIFIs), subjecting them to heightened oversight.

Insurance auditors should also be aware of the specific insurance laws and regulations in the states they operate in. For example, California introduced new insurance protections for consumers in 2023, addressing climate change, health access, reproductive care, fraud protection, and public safety. These laws included the creation of a statewide extreme heat advance warning system and the authorisation of Climate Resilience Districts to help communities mitigate disaster risks.

With the increasing use of artificial intelligence (AI) in the insurance industry, auditors should also stay informed about regulatory frameworks related to AI use. For instance, Colorado's regulatory framework for insurers, designed to prevent bias and discrimination in AI models, will be fully effective in 2024.

By staying up-to-date with insurance laws and regulations, insurance auditors can ensure they provide accurate information to their clients and make informed decisions in their work.

Frequently asked questions