Coverholder and TPA Audit

Coverholder and TPA audit is a key component of the monitoring process of delegated authorities. The Lloyd’s market has been moving towards more common audit practices across managing agents since 2010, firstly with the creation of a standard Coverholder audit scope and claims testing sheet, and more recently with the introduction of a TPA audit scope, very much aligned to the Coverholder audit scope. Versions 3.0 reflect the most current versions of these documents, including some subtle changes to the guidance document for the Coverholder scope guidance, so that it aligns to the new, and enhanced guidance within the TPA scope guidance.

TPA Audit Scope:

Building on the success of the Coverholder audit scope, a TPA specific audit scope has been created, with the ambition of providing greater consistency to the markets approach to the audit of TPAs, and facilitating the uptake of co-ordinated audits. The new TPA audit scope mirrors the existing Coverholder audit scope, but has been updated to reflect the nuances of auditing a TPA. Where the risks of auditing a Coverholder and TPA are the same, we have applied the same criteria. The TPA audit scope guidance has been significantly updated to provide greater clarity on the market’s expectations of the audit.

Coverholder Audit Scope:

LMA members in conjunction with the LMA executive and Lloyd’s drafted the original audit scope to ensure that risks are reviewed and assessed in a way that is proportionate to the nature of the Coverholder and the portfolio of business that they are underwriting. Version 3.0 of the Coverholder audit scope has had no material changes to structure or content. The Coverholder audit scope guidance document has been updated to provide greater clarity on the markets expectations of the audit, and aligns exactly to the corresponding sections within the TPA audit scope guidance.

This audit scope is purely illustrative and distributed for the guidance of members, who are free to use any audit scope to oversee their Coverholders. The LMA accepts no responsibility for any loss occasioned to any person acting or refraining from acting as a result of material contained in these documents.

Claims Testing Sheet 

An updated claims testing sheet has also been created, for use as a technical file audit question set, including an aggregation and reporting tool to group and analyse audit findings. This will enable the appropriately skilled auditor to complete a robust technical claims file audit.

Where managing agents have questions regarding either scope please contact the LMA or the Coverholder audit team at Lloyd’s. Auditors and other market participants with questions regarding the scope should route any questions through the instructing managing agent.

Audit Scope 

   Coverholder Audit Scope v3.0
   TPA Audit Scope v3.0
   Coverholder Audit Scope Guidance v3
   TPA Audit Scope Guidance - v3 Final 


   

Testing Appendices:

The below testing appendices are provided as examples. Auditors should confirm with managing agents how testing is to be undertaken prior to an audit taking place, and whether specific testing appendices are to be used.

 
Underwriting Testing v1.1
 
Claims Testing Sheet including aggregation and reporting v3.1
  Complaints at Claims Denial Testing v1.1  
 
Claims KPI Testing v1.1 

 

Instruction Template:

 
Instruction Template v1.1

 

Archive documents


Scope Template v1.1 


Complaints at Claims Denial Testing (Word)


Guidance v1.1 - track changes  

 

 

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Tim Bowling
Senior Executive, Claims

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