Artificial intelligence and other data-centric tools can make a premium auditor like Mike Warner’s work go a lot faster and easier most days. But managing volumes of data at great speed doesn’t fix everything.

Warner has been in the business for 32 years. That’s long enough to recognize when an industry problem is hiding in plain sight. Something that machine learning can miss.

At the April ReSource Pro Summit 2026 in Palm Springs, Warner, VP of Premium Audit at Atlanta-based Builders, spoke alongside Dan Swensen, ReSource Pro senior practice director for Learning & Development, about what he called “a silent crisis”: the estimated $30 billion in annual revenue lost to premium leakage across the insurance industry.

Warner illustrated the problem with a recent case that came across his desk.

A policy was written for one employee at $40,000 in payroll exposure—generating roughly $400 in premium. When a workers’ compensation claim occurred, the audit revealed the reality: the policyholder’s mother owned the covered company, but her daughter ran a separate, uninsured company with 100 employees and $4 million in exposure. The claim occurred at the daughter’s uninsured entity. The proper premium should have been $240,000. The premium leakage amounted to $237,600 on a single policy.

“Premium leakage happens when you write a policy expecting X premium but don’t get the proper amount due to unintended consequences,” Warner said. “We don’t want more, we don’t want less. We just want what’s right so we can be profitable.”

Construction Makes Everything Harder

Construction insurance operates under different rules than other commercial lines.

Carriers can add multiple class codes to construction policies in ways they can’t for brick-and-mortar businesses. Operations shift mid-policy. A contractor starts out as a framer, pivots to roofing, then picks up concrete work as the market demands.

“You think you started out this way and it ends up that way,” Warner said in an interview after his session. “Typically, a brick-and-mortar chain isn’t going to see a significant change to their operations over a few years. In construction, operations change rapidly. Companies are trying to make as much as they can, do whatever they can.”

That volatility creates classification gaps. Warner cited a construction policy where debris removal code 5610 was incorrectly paired with residential construction code 5645, suppressing premiums for years.

“It took 12 years to get that code off our policies,” he said.

Auditors conduct reviews after the policy expires, looking backward in time to verify what actually happened on job sites. Off-the-books cash payments to workers compound the challenge.

“You’ve got to be very educated as an auditor to really understand what class codes exist at that time,” Warner said. “That’s why it’s more volatile.”

The Question Auditors Don’t Ask

Warner pointed to an ISO AI tool that identified a Papa John’s location in upstate New York with a liquor license—a class code that would have been missed under traditional classification methods, given that the pizza chain doesn’t tend to sell adult beverages.

“How many of you think Papa John’s sells alcohol?” Warner asked during the session.

No hands went up.

“So what we do as auditors is we go in with certain preconceived notions on how things are. You don’t ask the question.”

The Papa John’s location needed liquor liability coverage. Without the AI flag, the auditor would have walked in assuming no alcohol sales, never asked, and missed thousands of dollars in premium exposure.

“The stupid question is the one you don’t ask,” Warner said. “Auditors have to be aware of what’s going on. If AI hadn’t identified it and the auditor hadn’t asked, we wouldn’t have known.”

It’s tempting to see AI as the answer, then, to the problem of unasked questions. But Warner noted that there are no digital shortcuts for the most essential aspects of auditing.

“Never take out the human element,” he said. “The technology surfaces anomalies, but it’s the auditors who must verify context, ask follow-up questions, and understand operational nuances that algorithms can’t capture.”

Premium Audit as Profit Center

Warner positioned premium audit not as a cost center but as “the gatekeepers of premium”—a profit function that verifies underwriting assumptions and captures additional premium where exposure was underestimated.

At Builders, the company tracks additional premium (AP) and return premium (RP) as budget line items. When audits uncover underestimated exposure, that additional premium flows to the bottom line.

“Should we have caught it in the beginning? Yes. Underwriters do their dead-level best to get the proper premium. Audit comes in and says, ‘trust but verify.’”

Still, audit alone doesn’t solve leakage. Breaking down silos comes first. At Builders, underwriting alerts flow from claims to underwriting and audit whenever a claim reveals misclassification or unreported exposure, Warner said.

He noted how claims expose classification errors: an employee classified as an executive supervisor filing a claim for injuries sustained while working at heights signals a misclassification—executive supervisors shouldn’t be climbing rafters. That worker belongs in a higher-rated class code, which means the policy has been underpriced from the start.

The Agent-Underwriter Tension

Warner acknowledged a structural tension can exist between agents and underwriters. Agents want to keep prices down to retain business. Carriers need accurate premium to price risk correctly.

“The agent can have a bit of a different goal than what we do,” Warner said. “They’re the same, but different. Some agents are afraid that if an insured gets a $10,000 or $20,000 AP, they may go to someplace else where others may not follow the rules and get a policy for a cheaper premium.”

“At Builders, we love our agents, we want to make sure they fit with our lifestyle and appetite and work hard to ensure we are both on the same page. We’re a smaller company, so we can do that, we like the human touch.”

Trust comes first, then verification.

“Trust comes easier when you have a relationship with individuals,” Warner said. “That’s where it works.”

Awareness as the Starting Point

In his interview with The Insurance Lead, Warner returned to a theme from the session: data integrity accounted for 8% of premium leakage in ReSource Pro’s research.

“8% may be a low number. It may be 20%. It may be 5%. But I know it’s an issue and we have to be aware of it. If we’re not aware of it, then we’ll lose premium.”

Awareness precedes solutions.

“You’ve got to be aware of a problem before you can fix a problem,” Warner said. “Then you’ve got to use all the tools in your arsenal to help mitigate it as much as possible.”

Training matters too. Warner quoted his father, who told him:

“The day you stop learning is the day you’re dead.”

Rules change. Class codes change. Market conditions shift.

“If your staff isn’t educated, they’re going to miss things.”

The session ended with a straightforward premise: premium leakage is universal.

“The organizations that reduce it,” Warner said, “are the ones willing to measure it and break down silos to fix it.”