19th August 2021
COVID has increased pressure on coverholders, but the Lloyd’s auditor process has also seen tightening timings and more onerous demands on the levels of information required. Lloyd’s issue the timetable for audits annually and provide a good lead up to when the audit has to be delivered, but the issues which have been created by COVID has left coverholders and Delegated Claims Administrator’s (DCA) under real pressure which has threatened to push the completion of the audit process to the eleventh hour.
Increasingly our audit team are being asked for ever more support from coverholders to successfully navigate not only the audit itself but also deliver on the recommendations that will arise and need to be acted upon. The requirements from the audit process are also increasing. We are finding that we require ever more information from the coverholders to complete the audit and the process has been made more difficult with the coverholders also required to devote more time to the business due to the impact of COVID. We are mindful though, that coverholders and DCA’s may have limited staff at times which can affect the overall running of the business.
From the outset we can support the Coverholder/DCA in determining what the various Lloyd’s requirements are and where they can make some improvements to meet these requirements. For many coverholders the audit will not become an issue until such time as it is required to be completed. In our experience if you have undertaken an audit, future audits will require the same types of information and the questions will remain similar. Our team of auditors can work with the coverholder and DCA to minimise the impact of information gathering by utilizing the systems available as well as requesting an update from last year’s questionnaires that were provided to us.
We are continually being asked to help coverholders navigate the various compliance requirements and how one can improve on having up-to-date protocols including business continuity plans, peer reviews, sanctions checks, etc. as well as all the various accounting and report requirements needed. As part of this process, we will evaluate the current online filing system and review with the coverholder on how they can improve records management and filing of documents. This will involve the provision of clear guidance on how documents should be stored to better assist with record keeping and therefore result in a better audit overall.
The preparation of the audit itself is only half of the issue. Audits will result in a range of recommendations and the timeframes for the resolution of those recommendations is also tightening as Lloyd’s looks to ensure adherence to the market’s processes.
Experience is so important, and our auditors have years of experience in the business and have conducted many audits on behalf of Lloyd’s. As such we can assist the coverholder in understanding what the objectives are after an audit is complete and where they can make the necessary adjustments to meet these objectives in the timeframes provided by the managing agents.
Coverholders often say that audits can be overwhelming, especially when you receive a lot of recommendations to go through. At these times you need to have the ability and understanding to prioritise the recommendations in terms of the most important, and those which needed to be addressed in order to enable you to address other requirements.
Coverholders are under intense pressure in the current market and the need to operate on tight budgets is important. Therefore, when faced with a list of recommendations the ability to devote staff to the process of resolving those recommendations can be difficult. We are increasingly acting as an advocate for our coverholders in discussions with Lloyd’s to assume the role of the bridge between the coverholder and London to create a strategy to resolve the recommendations that are acceptable and achievable. It can involve support and guidance to staff on how they can improve on both quality and timeliness. It may also involve recommendations on whether hiring more staff would be beneficial to the recommendations process.
The audit process will not get any easier. However, with a structured approach and access to experienced advice they and any subsequent recommendations do not need to be feared. Rather the audit can act as an annual review of the processes you have in place and areas where performance can be improved.
If you would like more information or discuss your auditing requirements, please contact our Audit Solutions Director, Katie Dontsos on Katie.Dontsos@davies-group.com.
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