This section talks about the detail on the policy lifecycle which guies the underwriting process:
1. Submit (application)
2. Rate
3. Quote
4. Bind
5. Issue
6. Administer
7. Terminate
Submit
Intake
Intake covers the application submittal and ancilerary data collection
Agent Broker Input:
The process typically begins with an insurance agent or broker submitting an application for coverage. This application includes essential information about the insured, such as:
Basic Information: business name, address, contact details, industry, ownership structure
Risk Profile: Details about the business operations, including revenue, number of employees, location(s), and any unique risk factors.
Coverage Requests: Specific coverage requested, such as General Liability, Property, Workers' Compensation, and others.
Data Collection:
Automated Systems: Many insurers utilize online platforms or agency portals for application submission and data entry, streamlining the process.
Supporting Documentation: Supporting documents, such as financial statements, loss history, and safety inspection reports, may be required.
Application Routing
Initial Triage: Upon receipt, applications are typically routed to an initial triage point, often within an underwriting department.
Risk-based Assignment: Applications are then routed to specific underwriters based on various factors, such as:
1. Line of Business: Auto, Homeowners, Commercial, etc.
2. Risk Complexity: High-risk applications may be routed to senior underwriters or specialized teams.
3. Underwriter Expertise: Matching underwriters with specific industry or product knowledge.
4. Workload Balancing: Distributing applications evenly across available underwriters to ensure timely processing.
Rate & Quote
Risk Assessment: Underwriters carefully review the application and supporting documentation to assess the risk associated with the proposed coverage. This may involve:
1. Loss History Analysis: Examining past claims history to identify potential risk areas.
2. Financial Stability Assessment: Evaluating the financial health of the business.
3. Risk Control Assessment: Reviewing safety measures, security protocols, and other risk mitigation efforts.
RATING (Pricing & Coverage Selection): Based on the risk assessment, underwriters determine appropriate coverage limits, deductibles, and premiums. They may also recommend adjustments to the coverage based on the risk profile.
Bind
Agent/Broker Authority:
(also see Bordereaux)
Binding Authority: Some agents/brokers have the authority to bind coverage on behalf of the insurer within certain limits (e.g., coverage types, policy limits). This allows for immediate coverage while the formal underwriting process continues.
Binder: A written or verbal agreement issued by the agent/broker confirming immediate coverage. This serves as temporary proof of insurance until the formal policy is issued.
Underwriter Approval: In some cases, underwriting approval is required before coverage can be bound. This is more common for complex or high-risk applications.
Importance of Binding:
1. Customer Satisfaction: Provides immediate peace of mind and protection for the insured.
2. Business Continuity: Ensures uninterrupted coverage for businesses, minimizing potential disruptions.
3. Legal Compliance: Meets legal requirements for insurance coverage in many situations.
Key Considerations:
Binding Authority Limits: Agents/brokers must operate within their binding authority limits.
Accuracy: Accurate and complete information is crucial for proper binding and to avoid coverage disputes later.
Documentation: Proper documentation of the binding process is essential for record-keeping and compliance.
Issue and Deliver
Policy Generation: Once the underwriting process is complete, the policy documents are generated. This may include: Declarations Page: Outlines key policy information, such as the insured, policy period, coverages, limits, and premiums.
Policy Forms: Detailed legal documents outlining the terms and conditions of coverage. Endorsements: Any modifications or additions to the standard policy.
Policy Delivery: The issued policy is typically delivered to the agent or broker, who then distributes it to the insured. Electronic delivery is becoming increasingly common.
Maintenance and Endorsement
Policy Changes: Throughout the policy term, changes may be necessary, such as: Endorsements: Adding or modifying coverages, changing limits, or adjusting deductibles.
Premium Adjustments: Adjusting premiums based on changes in risk or loss experience.
Claims Handling: When a claim occurs, the insured or agent reports the claim to the insurer. The claims department investigates the claim, determines coverage, and processes payments.
Renewal
Policy Review: At policy renewal, the underwriting process is typically repeated to assess the ongoing risk and determine appropriate coverage and pricing for the next policy period.
Premium Adjustments: Premiums may be adjusted based on the insured's loss experience, changes in risk, and market conditions.
Regulatory Compliance
Adherence: Ensuring all processes comply with regulatory requirements.
Reporting: Generating reports for regulatory bodies.
Servicing
Inquiries and Assistance: Addressing policyholder inquiries, providing information about policies, and assisting with any issues or concerns.
Claims Support: Guiding policyholders through the claims process, from submission to settlement.