Auditable Insurance Policy Bulletin
To: All Oklahoma Authorized Insurers Who Have Delivered or Issued For Delivery An Auditable Insurance Policy in Oklahoma
From: Glen Mulready, Insurance Commissioner
Date: April 27, 2020
Re: Auditable Insurance Policy Bulletin
Applicability and Scope
A. This bulletin shall apply to all admitted insurers who have issued any policy of insurance in Oklahoma that provides insurance coverage to commercial insureds whose insurance policy is rated using an auditable exposure basis, including but not limited to, payroll, sales, enrollment, attendance, occupancy rates, square footage or any other basis.
B. This Bulletin shall apply to all Oklahoma commercial policyholders regarding any commercial insurance policies rated using an auditable exposure basis, including but not limited to, payroll, sales, enrollment, attendance, occupancy rates, square footage or any other basis.
For purposes of this OID Auditable Policy Bulletin the following terms are defined:
- “Auditable Insurance Policy” means a policy of insurance that provides commercial insurance coverage to insureds that is rated using an auditable exposure basis, including, but not limited to, payroll, sales, enrollment, attendance, occupancy rates, square footage or any other basis.
- “Commissioner” means the Insurance Commissioner of the State of Oklahoma.
- “Insured” means a natural person or entity operating a commercial enterprise in Oklahoma who has a policy of commercial insurance issued by an admitted insurer.
- “Insurer” means an authorized insurer as defined in 36 O.S. § 101 et seq. doing business in Oklahoma and who has delivered or issued for delivery in Oklahoma an auditable insurance policy.
- “Physical Audit” means an on-site or desk examination conducted by the insurer that analyzes the rating variables that form the basis for the premium.
- “Self-Audit” means an analysis conducted by the insured of the rating variables that form the basis for the premium.
- “Surplus Lines Insurer” means an unauthorized insurer as defined in 36 O.S. §§ 1101 et seq. operating in Oklahoma.
Insured’s Right to Demand Mid-Term Self-Audit and Insurers Obligation
A. Any insured who has an auditable insurance policy issued by an admitted insurer shall have the right to make a demand upon its admitted insurer to permit the insured to immediately conduct a one-time, mid-term self-audit of the insurance policy.
B. Any admitted insurer who receives a demand from its insured for a mid-term self-audit shall honor the demand and shall assist in the mid-term self-audit being conducted by the insured.
C. A demand by an insured for a mid-term self-audit made at any time before the termination of this Bulletin shall be valid and enforceable between the insured and the admitted insurer. Further, the insured shall have the right to complete the mid-term self-audit at any time up to the termination of the insurance policy.
D. Upon the completion of the mid-term self-audit by the insured, the insured shall promptly transmit the results of the mid-term self-audit to the admitted insurer.
Adjustment of Premium upon Completion of Mid-Term Audit
A. If the mid-term self-audit conducted by the insured establishes that the presumptive premium charged at the initiation of the subject insurance policy is now in excess of what the premium would be based on the current rating variables, the insurer shall adjust the premium immediately but in no event less than 10 days from the completion of the mid-term self-audit.
B. Any overpayment of premium shall result in the admitted insurer making a refund of the overpayment to the insured within 10 days from the completion of the mid-term self-audit.
C. Upon the completion of the mid-term self-audit, the admitted insurer and the insured shall continue to operate in the normal course of business as set forth in the insurance policy, except as otherwise provided for herein.
Insurer’s Right to Conduct Physical Audit and Insured’s Duty to Cooperate
A. Any admitted insurer who, pursuant to this Bulletin, has been required to allow its insured to conduct a mid-term self-audit retains the right to conduct a physical audit of the auditable insurance policy at any time during the policy term or at the end of the policy term as provided in the insurance policy terms and conditions in order to ensure the calculation of proper premium for the risk.
B. If an admitted insurer chooses to conduct a mid-term physical audit, it shall transmit the results of said mid-term physical audit to the insured immediately and without the necessity of any demand by the insured.
Questions or comments applicable to this bulletin should be directed to Mike Rhoads (email@example.com) or Ron Kreiter (firstname.lastname@example.org), Oklahoma Insurance Department, 400 NE 50th Street, Oklahoma City, OK 73105-1816.
About the Oklahoma Insurance Department
The Oklahoma Insurance Department, an agency of the State of Oklahoma, is responsible for the education and protection of the insurance-buying public and for oversight of the insurance industry in the state.