Application of Information Systems Auditing in the Insurance Industry in Sri Lanka

Abstract

The current trend in business world is to use IT wherever it is possible. So lots of manual systems and procedures have been replaced with computer systems over the years. There is no difference in the Insurance Industry also. Central database, data warehousing, on line fund transferring and corporate websites or intranet are no more strange terms in the Insurance Industry. But the controlling and the detecting methods or in other words internal audit techniques have not been changed over the period accordingly. As a result of it frauds, errors and mistakes have been increased in the Insurance business during the last decade. This is a critical issue in an industry where an organisation has to look after customers’ money for 20 to 30 years. Insurance simply means sharing the risk among a large number of people in the society at a price. In Sri Lanka, there is a rapid growing interest about Insurance is visible among people not only in Colombo and suburbs but also in remote areas. As a result of this trend, almost all the insurance companies invested heavily in the industry during last few years. At the same time all insurance companies are in a heavy competition in order to increase their share in the market.

Generally all the Insurance Companies have software applications to accommodate the processes such as Generation of On-line quotations, Policy Underwriting, Policy Administration, Investment & Unit Funds Management, Agency Management, Claims Management, Actuarial Valuations, Customer Relationship Management, Accounting, Human resources & Payroll applications etc. Also Systems such as payments through Internet, Premium collections via Teller machines, SLIPS transfers, Transactions via Mobile phones, transactions via Palm held devices have been implemented with the latest IT developments. But as mentioned earlier if the tendency is to increase the number of frauds, errors and mistakes in the Industry customers will loose their faith on Insurance and it will hinder the growth of the industry. So the Information Systems Auditing in Insurance Industry can be recognized as an industry requirement under current circumstances. So in this research my objective is to develop a frame work, a guideline and a prototype to implement and practice IS auditing in Sri Lankan Insurance organizations.