How to Process a Policy Audit

How to Process a Policy Audit
A policy audit is conducted by the carrier, usually for Workers’ Compensation or General Liability policies, to verify actual exposure (e.g., payroll, gross sales) against the estimates used at policy inception.

The audit may result in:

• Additional Premium – if actual exposure is higher than estimated
• Return Premium – if actual exposure is lower than estimated
• No Change – if actual matches estimated

Important: This process is only necessary if the policy is not carrier downloaded. If the policy is downloaded, the audit and billing adjustments will flow into Momentum AMS via carrier download and require reconciliation instead of manual entry.

1️⃣ Locate the Policy

Use Dynamic Search to find the insured.
Open the Insured’s Profile and go to the Policies section.
Click the Policy Number for the audited policy.

2️⃣ Gather Audit Details

Review the carrier-provided audit statement for:
- Audit type (Final, Interim, Voluntary)
- Audit period dates
- Updated exposure figures
- Additional or return premium amount
Save a copy of the audit statement to Documents → Files in the insured’s record.

? Best Practice: Document in Activity History → Notes that an audit was received, including the carrier’s reference number, date received, and any deadlines for disputing the audit.

3️⃣ Create the Audit Endorsement

Go to the Billing tab in the policy.
Click Endorsements / Fees & Taxes.
Click Actions → Add Endorsement.
In the Type dropdown, select:
- Premium Audit (preferred when available)
- Or Positive Endorsement (for additional premium)
- Or Negative Endorsement (for return premium)
Enter the Base Premium adjustment from the audit:
- Additional Premium – Positive number
- Return Premium – Negative number
Adjust taxes and fees as needed.
Click Generate Transaction and verify the Checksum is zero before saving.

4️⃣ Invoice or Refund

Agency Bill:

Go to Documents → Invoices/Receipts
Create an invoice for any additional premium or issue a refund for a return premium

Direct Bill:

Update AMS for recordkeeping only — the carrier will handle billing or refund directly

5️⃣ Communicate with the Insured

Send the insured a copy of the audit results and explain the outcome
If additional premium is due: Provide payment instructions or an invoice link
If a refund is due: Advise on timeline for refund from the agency (Agency Bill) or carrier (Direct Bill)

✅ Best Practices:

Track all audit follow-up steps as tasks in the Tasks Pipeline until complete
Document all communications, disputes, or corrections in the insured’s notes for audit trail purposes