Changing Environment of Insurance Sector Broaden the Scope for Internal Auditors

Internal auditors play a crucial role in controlling systems within insurance and other financial service companies. These organisations are more interested to implement internal control systems and effective risk management as it becomes tough to sustain in an economic environment where regulatory standards are often modified.

Volatile financial markets, business regulations, new prudential and general insurance claims demand for independent assessment of risks and controls. In such a backdrop, the internal auditors have become more worthy for the organisation. There are three broad challenges in front of the auditors. The internal auditors have to improve focus on their field, strengthen relationship with external stakeholders and organisations have to create structures that are required by the auditors to effectively perform. 

Focus on auditing activities

Competition is extremely high in every form of organisation, what will make a company stand out in the competition and do well is focus on the right issue. Internal auditors have to pinpoint the areas that may adversely affect the businesses and control the emerging challenges.

A relevant approach for internal audit is to deliver sustainable value to customers, employees and shareholders. In order to develop a healthy relationship the auditors have to treat customers fairly, develop financial strength and resilience and be aware of the regulatory and legal obligations. The auditors have to prioritise their job in respect to business requirements.

Building relationship with the stakeholders

The internal auditors have to report to the internal stakeholders such as risk and audit committees. Therefore, their relationship with the outside stakeholders remains opaque. In the insurance industry there is an enhanced emphasis on controls and regulations. Insurers are therefore bound to introduce effective internal control mechanisms. This new approach will only work out if the internal auditors strengthen their relationship with external stakeholders.

Structures of the organisation

Developing an effective organisational structure will mean an emphasis on stakeholders, people management and audit delivery. The interrelated challenges that internal auditors have to face in the insurance industry are:

Strategic positioning

Most insurance companies have invested sufficiently to manage their risks. They implement three lines of defence model- frontline management, internal audit and risk management. A clear distinction has to be there within each of the lines. Therefore, the internal auditor can focus mainly on the control mechanism and risk management. The auditors will require skills and capabilities to perform the functions in a highly detailed level.

The second challenge of internal auditing is to

Align the structure

There should be alignment between methods, approach and assurance activities of risk management and internal audit functions. It is difficult to achieve integrated assurance. The detailed and robust risk management framework of the companies helps to take practical steps to align.

Grasping the opportunity

More and more insurance industries in order to meet the challenges and sustain in the face of competition are recruiting internal auditors. Unlike other financial professions, there is no pre-defined academic route to become an auditor. Some of the skills that will help to secure a job are numerical ability, knowledge of accounting, business and economics. Irrespective of whatever courses you select, you must come out with flying colours. It is mandatory to gather work experience and gain relevant certification to find suitable placement.

The business outlook and techniques are continuously changing and the internal auditors need to have the updated knowledge of the market. Often companies arrange in-house training for their internal auditors. Apart from that they need to read various magazines related to the industry and attend conferences to gather knowledge about the latest happenings.

Although there are sufficient opportunities for internal auditors in the insurance sector, competition still persistss. Companies are searching for talented professionals equipped with expertise and experience to meet the challenges of the industry. In order to gather more industry details or career related information you may refer to insurance recruiting specialists’ websites. 

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