Purpose of the Checklist
Life insurers face complex regulatory, financial, and operational risks. An internal audit checklist provides a systematic way to verify that policies, procedures, and controls are effective, consistent, and aligned with statutory requirements. Using the checklist each audit cycle helps pinpoint gaps before they become material issues and demonstrates board‑level oversight.
- Purpose of the Checklist
- Governance and Board Oversight
- Underwriting Controls
- Claims Management
- Financial Reporting and Actuarial Valuation
- Regulatory Compliance
- Information Technology and Cybersecurity
- Risk Management and Internal Controls
- Sample Table: Key Audit Areas and Typical Test Procedures
- Reporting and Follow‑Up
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Governance and Board Oversight
Audit the structures that guide strategic decisions and risk appetite.
- Board composition and independence
- Frequency and documentation of risk‑management committee meetings
- Approval process for major underwriting guidelines
- Conflict‑of‑interest disclosures for senior executives
Underwriting Controls
Ensure that risk selection and pricing follow approved models.
- Verification that underwriting policies are current and approved by the board
- Sampling of policy files to confirm adherence to risk‑class criteria
- Review of pricing assumptions against actuarial models
- Checks on re‑insurance arrangements and limits
Claims Management
Assess the integrity of claim settlement processes.
- Timeliness of claim acknowledgement and investigation
- Segregation of duties between claim adjusters and payment processors
- Random sample of high‑value claims for fraud indicators
- Compliance with statutory grace periods and benefit guarantees
Financial Reporting and Actuarial Valuation
Validate that financial statements and reserve calculations are reliable.
- Reconciliation of policyholder liabilities to actuarial reserve reports
- Review of expense allocation methodology for accuracy
- Testing of data integrity in the general ledger
- Assessment of compliance with IFRS 17 or local GAAP
Regulatory Compliance
Confirm that the insurer meets all licensing, reporting, and solvency standards.
- Verification of annual statutory filings and deadlines
- Assessment of anti‑money‑laundering (AML) controls and customer‑due‑diligence records
- Review of data‑privacy safeguards under GDPR, CCPA, or local laws
- Check for any regulatory penalties or open investigations
Information Technology and Cybersecurity
Audit the digital infrastructure that stores policyholder data and supports core systems.
- Inventory of critical applications (policy administration, claims, actuarial)
- Testing of access controls and privileged‑user monitoring
- Evaluation of backup and disaster‑recovery procedures
- Review of recent penetration‑test results and remediation status
Risk Management and Internal Controls
Examine the enterprise‑wide approach to identifying and mitigating risk.
- Completeness of the risk register and its regular updates
- Effectiveness of key risk indicators (KRIs) and thresholds
- Documentation of control testing results and corrective action plans
- Alignment of risk appetite statements with capital adequacy targets
Sample Table: Key Audit Areas and Typical Test Procedures
| Audit Area | Typical Test | Evidence Required |
|---|---|---|
| Underwriting | Select 30 policies; verify risk class matches guidelines | Underwriting files, policy system logs |
| Claims | Trace 15 high‑value claims from receipt to payment | Claim forms, payment vouchers, audit trail |
| Financial Reporting | Reconcile reserve calculations with actuarial report | Reserve schedules, actuarial assumptions |
| IT Security | Review user‑access matrices for privileged accounts | Access logs, role‑based permission lists |
Reporting and Follow‑Up
After fieldwork, auditors compile findings into a report that grades each control, recommends remediation, and assigns responsibility. Management must track corrective actions, update the checklist for the next cycle, and present a summary to the board's audit committee.