The right to audit a cedant is one of very few claim entitlements.
Typically, the reinsurance contract provides precious few rights to the reinsurance claim department. One of those contractual entitlements is the right to audit the books and operations of the cedant. The audit process is frequently the only mechanism available to the reinsurer to validate the cedant's claim handling process. One size does not fit all. Despite the commonality of the process, the objectives of the audit represent an array of diversity. Some of those objectives can be: 

• An opportunity to solidify beneficial business relationships.
• A mechanism to communicate the reinsurer's expectations to the cedant.
• Uncover flaws in the manner in which coverage is applied, claims are handled, or losses are reported.
• Guiding and assisting underwriting managers in making renewal and pricing decisions.
• Assisting the reinsurer in developing appropriate reserves, even if the cedant's reserving approach is different than the reinsurers.
• Identification of major losses or claim issues not easily recognizable via loss runs or other routine data sources.

In addition to a review of claim files, the audit process also reviews organizational structure, claim department procedures, key personnel, and other issues.

Post audit communication and follow-up, both to the reinsurer and cedant, are the final ingredient in the successful and effective reinsurance audit.