Claims Auditing Checklist

Export the full file: FNOL, adjuster notes, correspondence log, reserve history, ALAE invoices, and any ROR or denial letters. Audits run against the live PolicyCenter/ClaimCenter record drift from what was archived to the document repo — pull from the system of record.

Most state unfair claim settlement practices acts require acknowledgment within a statutory window (Texas: 15 business days; many NAIC-model states: 10–15 days). Confirm the acknowledgment letter or call log is dated within the window from the FNOL date stamp.

Coverage state drives which prompt-pay statute and unfair-claim-practices rules apply; claim status drives whether the denial-letter audit and payment audit branches run. Use the dec page state, not the loss state, when they differ.

Many carriers screen at policy issuance but skip re-screening at claim payment. Confirm a screen was run against the claimant, any assignees, public adjusters, and medical providers prior to issuing payment — the SDN list updates continuously.

Confirm the date of loss falls inside the policy period, the loss location matches a scheduled location or covered territory, and the cause of loss aligns with the form's covered perils. Mid-term endorsements often shift coverage — read the in-force version, not the original bind.

State recording laws split one-party and two-party consent. Confirm the adjuster disclosed recording at the start of the statement, the insured acknowledged on tape, and the recording is preserved in the file. Missing disclosure makes the statement inadmissible and supports a bad-faith argument.

If a coverage issue was identified, confirm a timely ROR letter went out citing the specific policy provisions in question. Generic ROR letters that don't cite provisions are routinely held insufficient by courts.

Many states require putting the at-fault party on notice within a statutory window — often six months. Missing this waives the recovery right and shows up as a market-conduct exam finding. Verify the subro referral, the demand letter, and the response log.

Most carriers require reserve review at 30/60/90 days and on any material development. Look for placeholder reserves that never updated, stair-step under-reserving, and large single-step jumps that suggest delayed recognition. Document any cadence misses.

Defense counsel, IME providers, and independent adjuster invoices should tie to the engagement letter rates. Spot-check three invoices against the rate sheet. ALAE leakage is a common audit finding on litigated claims.

Most excess policies require notice of any matter "reasonably likely to involve" the excess layer; carriers commonly use 50% of the primary as a practical trigger. Capture whether the reserve has crossed that threshold so the next step audits the excess notice if needed.

Confirm a notice letter went to each excess carrier in the tower, citing the policy number, the matter, and the current reserve. Keep the certified-mail receipt or email delivery confirmation in the file. Late excess notice is a coverage-condition violation that can void recovery.

Chapter 542 requires acknowledgment within 15 business days of FNOL, decisioning within 15 business days of receiving all requested information, and payment within 5 business days of acceptance — 60 days max from the receipt of all items. Each missed milestone triggers 18% statutory interest plus attorney's fees. Document each timestamp.

The denial letter must cite the specific policy provisions relied on, identify what facts drove the conclusion, and disclose the appeal/complaint process per the state's unfair claim settlement practices act. Form-letter denials that omit the factual basis are the leading source of bad-faith exposure.

If the file shows any incident involving NPI exposure — misdirected claim packet, vendor breach, lost laptop — confirm the 72-hour DOI notification went out under the NAIC Insurance Data Security Model Law (or NYDFS Part 500 in NY). Default IR playbooks often run on the HIPAA 60-day window and miss this.

Most P&C lines require 5–7 years of file retention; workers' comp is typically 10+ years or life-of-claim given lifetime medical exposure. Confirm the file is tagged with the correct retention class — premature destruction creates discoverable spoliation risk.

Apply the standard handling rubric: timeliness, coverage analysis, reserve adequacy, investigation thoroughness, customer communication, regulatory compliance. Tie each finding to the specific step above where the issue was identified.

Final sign-off captures the overall audit result, any required remediation actions for the handling adjuster, and the reviewer's signature. Pass-with-notes findings should be routed to the claims manager for coaching; fail findings trigger a re-audit on the next cycle.