What does the premium audit assess in relation to insurance policies?

The premium audit primarily focuses on evaluating the actual exposures of a business compared to the estimated exposures that were used in determining the premium. This process is essential for ensuring that the premiums charged accurately reflect the risk associated with the insured entity.

During a premium audit, the insurance company reviews various factors that contribute to risk, such as payroll, sales, or property values, and compares those to the estimates provided at the time the policy was underwritten. This assessment helps to identify whether the initial premium was set too high or too low based on the actual risk profile of the insured.

By making this comparison, the insurer can adjust the premium accordingly—either issuing a refund if the actual exposure is lower than estimated or charging additional premium if the actual exposure is higher. This process ensures fairness in pricing and helps maintain the financial stability of the insurance company, as premiums need to be aligned with the risk being insured.

Other options, such as assessing the health of clients or the number of claims filed, do not directly relate to the purpose of a premium audit. The audit specifically focuses on underwriting accuracy and the assessment of risk exposures rather than these other factors. Therefore, the correct answer emphasizes the critical function that premium audits serve in the overall insurance process.