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The Effectiveness of Forensic Auditors in the Insurance Process

Author

Listed:
  • Yanika Caruana
  • Simon Grima
  • Yannis Thalassinos
  • Peter J. Baldacchino

Abstract

Purpose: With this study, the authors aim to design a measure to determine the effectiveness of having Forensic Auditors in the Insurance Business. Moreover, in doing this to determine whether this measure is affected by different demographic variables. Design/Methodology: To prove the effectiveness of forensic auditors in the insurance industry, the authors designed a questionnaire using criteria of effectiveness established by Bond et al. (2011) which was completed by 402 valid participants. The criteria revolved around having procedural, substantive, transactive and normative effectiveness. Findings: Results show that engaging forensic auditors in the insurance industry are effective. Forensic auditors are needed in the claims process of insurance firms, and possibly, they should further be engaged in the risk management team of an insurance company. However, with regards to determining the compensation amount, respondents showed a lack of trust, and prefer if forensic auditors work together with loss adjusters, lawyers, and actuaries to enhance their service. Practical Implications: With the engagement of forensic auditors, there would be added benefits to society. Although insurance firms may not eventually benefit in lower claims costs, they would benefit in the way they decide to reserve. Society would also benefit from such engagement, for instance, from enhanced knowledge of fraud detection thereby affecting the behaviour of society towards insurance business, which would ultimately reduce opportunities and capabilities of fraudsters.

Suggested Citation

  • Yanika Caruana & Simon Grima & Yannis Thalassinos & Peter J. Baldacchino, 2020. "The Effectiveness of Forensic Auditors in the Insurance Process," International Journal of Finance, Insurance and Risk Management, International Journal of Finance, Insurance and Risk Management, vol. 10(4), pages 134-158.
  • Handle: RePEc:ers:ijfirm:v:10:y:2020:i:4:p:134-158
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    Citations

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    Cited by:

    1. Emerita Kagombora & Crispin John Mbogo, 2024. "Role of Proactive Forensic Audit in Safeguarding Assets of an Organisation," International Journal of Research and Innovation in Social Science, International Journal of Research and Innovation in Social Science (IJRISS), vol. 8(3), pages 321-338, March.
    2. Steven Grima & Peter J. Baldacchino & Simon Grima & Murat Kizilkaya & Norbert Tabone & Lauren Ellul, 2023. "Designing a Characteristics Effectiveness Model for Internal Audit," JRFM, MDPI, vol. 16(2), pages 1-44, January.

    More about this item

    Keywords

    Forensic Auditing; Forensic Auditors; Fraud; Insurance Firms; Insurance Claims.;
    All these keywords.

    JEL classification:

    • M42 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Accounting - - - Auditing
    • G22 - Financial Economics - - Financial Institutions and Services - - - Insurance; Insurance Companies; Actuarial Studies

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