What Is an Associate in Premium Auditing (APA)?
Associate in Premium Auditing (APA) is a professional designation awarded by The Institutes, a nonprofit trade organization that provides training for those who are in, or who want to join, the insuranceindustry.
An APA is generally a Certified Public Accountant (CPA) whose specialty lies in the field of insurance—they have been granted the professional status (and presumably have the expertise) to audit premiums, analyze contracts, and perform other financial duties for insurance companies. To gain the designation of Associate in Premium Auditing, a series of exams must be passed successfully.
Key Takeaways
- The Associate in Premium Auditing (APA) is a professional designation for accountants specializing in the field of insurance.
- The APA credential is awarded and administered by The Institutes, a nonprofit insurance industry organization.
- APAs have the expertise to audit insurance premiums and analyze insurance contracts, among other duties for insurers.
- Obtaining the APA is a 12-15 month process, requiring individuals to pass five different courses relating to auditing techniques, insurance-company financials, and business ethics.
Understanding the Associate in Premium Auditing (APA) Designation
A person holding the Associate in Premium Auditing (APA) designation has a comprehensive education in insurance contracts, auditing procedures, principles of insurance accounting, casualty insurance company accounting, and the relationship of premium auditing to other insurance operations. In short, they are expected to have accounting skills as well as extensive knowledge of insurance principles.
Individuals who have achieved the APA designation are widely believed to be experts in analyzing insurance contracts with an eye for parsing financial data. Their collective skills are not limited to, but often center on, the ability to inject accounting and auditing methodologies with the many nuances of insurance products and insurance operations.
Among many other functions, individuals with the APA designation help strengthen the accounting and control protocols necessary for insurers to get more competitive with their pricing and products while maintaining high standards of fiscal management.
Obtaining an APA
One of 27 professional designations offered by The Institutes, the APA is considered a "specialized designation" by the association—meaning, it is a fairly advanced one. It's recommended for aspiring underwriters or auditors of premiums. Some of them are designed specifically for the APA program and others are Chartered Property Casualty Underwriter (CPCU) courses, another designation offered by The Institutes (these courses count towards getting that credential as well).
Applicants are required to pass exams in five out of six courses to obtain their APA credentials. Class materials and exams range in price from $280 to $445. Here is the current curriculum.
Understanding Premium Auditing
A required course. Topics include understanding premium audit fundamentals, planning a premium audit, reviewing an insured’s operations and employees, evaluating and verifying an insured’s financial records, and creating a premium audit report.
Auditing Premiums for Insurance Products
Another requirement, the subjects covered are rate-making fundamentals, understanding and auditing workers' compensation insurance policies, understanding and auditing general liability insurance policies, and auditing commercial auto policies. The goal of the course is to use premium determination when performing audits on insurance policies.
Meeting Challenges Across Insurance Operations
One of the CPCU courses, this mandatory class covers maximizing the insurance value chain, how claims fulfill the insurer’s promise, leveraging commercial underwriting strategy, adding value through personal lines underwriting, seizing competitive edge through marketing, expanding capacity with reinsurance, and the actuary’s role in ratemaking.
The average completion time for earning an APA takes 12 to 15 months, according to The Institutes.
Contributing to Insurer Financial Performance
Another CPCU course, this elective covers how to use accounting concepts and principles to make strategic financial decisions in everyday work-related tasks. Topics covered include developing a holistic view of insurer finances, identifying key financial measures, interpreting insurer financial statements, analyzing key ratio results, assessing investment opportunities, and strategically managing capital.
Managing Commercial Liability Risk
Topics for this elective course, another CPCU class, include recommending commercial general liability coverage, selecting business auto coverage, covering cyber losses, managing workplace risks, filling liability coverage gaps, and thinking critically about commercial liability loss exposures.
Ethical Decision Making in Risk and Insurance
A course required for most of The Institutes' credentials. Topics include the foundations of ethical behavior, supporting professionalism, maintaining high ethical standards, ethical responsibility to groups, an approach to resolving ethical dilemmas, ethical perspectives, ethical decision-making tools, barriers to ethical decision-making, ethical guidelines for insurance professionals, and ethics case studies.
Special Considerations
The Institutes, which oversees and awards the Associate in Premium Auditing designation, dates back to 1909. Originally known as the Insurance Institute of America (IIA), it was founded primarily to educate risk managers, insurance agents/brokers, underwriters, and other insurance professionals by conducting seminars.
Since then, its scope and reach have grown significantly, as it "works on a global scale as the leading provider of education and research" for professionals in the commercial, personal, and life and health insurance industries.
What Does a Premium Audit Reviewer Do?
A premium audit reviewer performs audits on an insurance company's premiums, ensuring they comply with regulations and standards. They also look at the information in order to apply results to the current policies of the insurance company.
What Skills Do You Need to Be a Premium Auditor?
The skills you need to be a premium auditor include communication skills, analytical skills, Excel skills, as well as experience in commercial and liability insurance, and workers' compensation.
What Is APA in Auditing?
An APA in auditing is typically a Certified Public Accountant (CPA) in the insurance field. It is a professional status to audit insurance premiums.
The Bottom Line
The Associate in Premium Auditing (APA) is an insurance designation signifying that an individual is a professional and expert in auditing insurance premiums and other related topics. This designation can greatly benefit insurance companies and makes an individual more marketable for insurance jobs.
