Premium Audit
Key Takeaway
A review conducted by the insurance carrier to verify that the premium charged accurately reflects the insured's actual risk exposure during the policy period. For law firms, premium audits may examine attorney headcount, revenue, practice area distribution, and whether any material changes occurred that would affect the premium calculation..
Definition
A review conducted by the insurance carrier to verify that the premium charged accurately reflects the insured's actual risk exposure during the policy period. For law firms, premium audits may examine attorney headcount, revenue, practice area distribution, and whether any material changes occurred that would affect the premium calculation.
Why This Matters for Law Firms
Underwriting terms determine what you pay for coverage and what terms you receive. Law firms that understand the underwriting process can present their risk profile more effectively, negotiate better terms, and avoid surprises at renewal. This knowledge is particularly valuable when shopping for new coverage or responding to carrier questions.
Example Usage in Context
A firm preparing for its annual insurance renewal might encounter this in the carrier's proposal: "The underwriter has adjusted our premium audit based on our claims history. Let's discuss with our broker whether we can improve this at our next renewal."
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