How SOC Audits Can Help Save on Errors & Omissions Insurance
As many companies look to reduce costs, one cost that continues to rise as the company grows is Errors and Omissions (E/O) insurance premiums. Both company liability and personal liability of the board of directors and owners is a topic that continues to be a focus of litigation. One of the ways a company can demonstrate they have sound controls over their control environment (which includes the tone at the top, board of directors’ participation, management oversight, etc) is to have a SOC audit conducted by a third-party auditing firm such as A-LIGN.
A SOC report covers the internal control environment of a company. Having the audit performed and submitting the final SOC audit report to your insurance carrier (along with a letter from your service auditor about the scope of the audit) can help reduce your E/O insurance costs. The report will demonstrate that your company has had an independent party evaluate the fact that you ARE having oversight over your control environment. E/O insurance typically covers the liability you may have because of negligence regarding your clients’ data and/or processing of transaction that result in a financial loss for said clients. The final SOC report will demonstrate the controls over those processes to mitigate that risk.
The proof is in the SOC report
That report is proof you had an outside party examine the exact processes that the insurance carrier is insuring against---the risk of you processing something incorrectly. It demonstrates to the carrier that your company has taken proactive steps to mitigate that risk. This is how a SOC report can help to reduce your E/O insurance premium. As a third-party SOC auditor, our clients have experienced a premium reduction by having a SOC audit performed.
Still unsure of how SOC reports can help reduce your E/O insurance premium? We'll be happy to answer all of your questions.
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