BEFORE
30 Day Control Report (30CR) Summary Paragraph
The objective of this audit was to provide an independent and objective assessment of the design and operational effectiveness of selected key controls underpinning a sample of policy administration activities serving PLOP’s retail clients (Component Changes – Modify, Component Mod Variable Premium, Unit Switch, Register Premium Skip, Change Contract Owner(s), Despatch Address and Full Contract Reversal). Most of the activities in scope of our audit do not have a specific control operating over each transaction undertaken; rather, the business relies on the competence of the operational staff making these changes, which are then subject to sample-based quality assurance. Overall, our opinion of the effectiveness of these processes is broadly in line with Management’s view as we identified a few errors in processing across the transaction types in scope.
Of the 220 policies sampled, 9.5% were subject to human error, resulting in processing errors (1 premium skip where the original policyholder request could not be evidenced), control failures (3 premium skips which were not approved prior to processing) or inaccurate filing of paperwork (6 cases). In addition, we identified opportunities to enhance controls over premium skips, monitoring of the reasons ‘full contract reversals’ were required and clarity of customer correspondence. In reviewing the errors we did not identify evidence of customer detriment occurring as a result, and we have considered this in reaching our opinion.
AFTER
30 Day Control Report (30CR) Summary Paragraph
Effective, with some useful fixes discussed.
Every year there are 30,000 policy activities covering 28,959 policy holders in over 100,000 policies. They represent nearly half our retail work. With so much goodwill tied up in this part of the business it’s important to assess how well key controls over policy administration are performing.
Most of the activities in scope of our audit do not have a specific control operating over their constituent transactions. For example, a customer writes in to update their contact address, and a member of staff updates it on the system; there are no particular checks on this. But any errors here are likely to be picked up in the sample based quality assurance process run by the team afterwards. Of the 120 policies sampled, 9.5% were subject to human error, resulting in processing errors and control failures or inaccurate filing of paperwork (5 cases).
We did find some issues, and the ones needing swift attention are:
Loose controls over premium skips, and loose controls over monitoring of the reasons ‘full contract reversals’
However none of the above caused any problems for the customer.
This, together with the fact that our view was in line with management’s was why we were able to assess this policy administration as ‘Effective’.