Casualty Actuarial Society (CAS) Practice Exam

What must auditors efficiently determine while reviewing insured's accounts?

1. The total number of claims

2. The quality of customer service

3. Records that provide necessary information

4. Best practices in underwriting

The correct answer is: Records that provide necessary information

When auditors review an insured's accounts, they must efficiently determine records that provide necessary information. This involves scrutinizing documentation related to insurance policies, claims, underwriting decisions, and other pertinent financial records to assess the accuracy and integrity of the insured's financial position and compliance with applicable regulations. The emphasis on records stems from the necessity of establishing an accurate financial picture and ensuring all transactions are appropriately documented. This information is critical for evaluating the risk exposure of the insured, determining the adequacy of reserves, and identifying potential discrepancies or issues that may warrant further investigation. Access to reliable and comprehensive records enables auditors to fulfill their responsibilities effectively and supports their findings and recommendations. While understanding the total number of claims, the quality of customer service, and best practices in underwriting are important in the broader context of insurance audits, they do not directly pertain to the fundamental task of gathering and verifying the essential records needed for an audit. Thus, the focus is on identifying and analyzing records that contain the necessary information for a thorough audit evaluation.