Cancellation and Nonrenewal Procedures

Carrier Request—Nonrenewal
Carrier Request—Mid Term
Cancellation at Insured’s Request—Mid-term
Company Request—Nonpayment of Premium—Midterm
Reinstatement Procedures

 

Carrier Request—Nonrenewal

  • Nonrenewal notice is received from carrier.
  • Open client file and document.
  • Contact insured and advise if an attempt will be made to replace coverage with another carrier.
  • If coverage is being replaced, REFER TO RENEWAL PROCEDURES.
  • If the agency does not wish to search for and find an alternative market or is unable to replace coverage, forward appropriate form letter to insured. Suspense for expiration date of policy.
  • When policy expires, send confirmation to insured. If this is the only policy for the client, make inactive and dead file or suspense for prospect activity as appropriate.
  • If the nonrenewal is on a claims-made policy, send form letter offering Extended Reporting Period (tail) coverage and suspense for acceptance and receipt of premium.
  • If ERP is accepted and payment is received, REFER TO POLICY CHANGE PROCEDURES for processing.
  • If ERP is not accepted, send form letter to insured and document file.
  • Clear suspense.

 

Carrier Request—Mid Term

  • Notice of intent to cancel is received in the agency from the carrier.
  • Open client file and document.
  • Contact insured and advise if an attempt will be made to replace coverage with another carrier.
  • If coverage is being replaced, REFER TO NEW BUSINESS PROCEDURES.
  • If the agency does not wish to search for and find an alternative market or is unable to replace coverage, forward appropriate form letter to insured. Suspense for cancellation date of policy.
  • On policy cancellation date, send confirmation to insured. If this is the only policy for the client, make inactive and dead file or suspense for prospect activity as appropriate.
  • If the cancellation is on a claims-made policy, send form letter offering Extended Reporting Period (tail) coverage and suspense for acceptance and receipt of premium.
  • If ERP is accepted and payment is received, REFER TO POLICY CHANGE PROCEDURES for processing.
  • If ERP is not accepted, send form letter to insured and document file.
  • Clear suspense.

 

Cancellation at Insured’s Request—Mid-term

  • Insured requests cancellation by phone, fax, mail or e-mail.
  • Open client file and update information.
  • Prepare ACORD cancellation request and forward to named insured (or first named insured) for signature using Cancellation Request form letter. (NOTE: This step is not necessary if insured has returned original policy along with cancellation request). It is not necessary to create a suspense for return of the cancellation request.
  • If signed cancellation request is received from insured, forward to carrier with request for cancellation.
  • Update client file. (NOTE: This is critical since any subsequent claim or request for service may be refused due to policy cancellation status).
  • Suspense for 30 days for receipt of cancellation from carrier.
  • When cancellation is received from carrier, verify for accuracy, update client file and create credit invoice if necessary. Transmit to insured and perform exit interview.
  • If policy is auditable, REFER TO POLICY AUDIT PROCEDURES.
  • Transmit cancellation confirmation and return premium to insured.
  • If policy is written on a claims-made form, prepare offer letter for Extended Reporting Period (tail) coverage and forward to insured. Suspense for acceptance and receipt of premium, based on the policy form.
  • If ERP is accepted, REFER TO POLICY CHANGE PROCEDURE for processing.
  • If ERP is not accepted, send insured confirmation and document file.
  • Clear suspense.
  • If this was the only policy the client had with the agency, make client inactive and place in dead file or suspense for future prospecting activity.

 

Company Request—Nonpayment of Premium—Midterm

  • Notice of cancellation is received from carrier or premium finance company. (NOTE: Do not contact insureds to notify them that their premium is overdue).
  • Update client file and suspense for 30 days for receipt of cancellation notice from carrier.
  • If the cancellation is on a claims-made policy, send form letter offering Extended Reporting Period (tail) coverage and suspense for acceptance and receipt of premium.
  • If ERP is accepted and payment is received, REFER TO POLICY CHANGE PROCEDURES for processing.
  • If ERP is not accepted, send form letter to insured and document file.
  • When cancellation is received from carrier, verify for accuracy and update client file.
  • If policy is auditable, REFER TO POLICY AUDIT PROCEDURES.
  • Clear suspense.
  • Contact client and perform exit interview.
  • If this was the only policy the client had with the agency, make client inactive and place in dead file.

 

Reinstatement Procedures

  • Servicing agent or producer determines if reinstatement of a canceled policy is appropriate.
  • Open client file and document.
  • Request reinstatement from carrier and suspense for 30 days for receipt of reinstatement confirmation.
  • If there is a lapse in coverage, notify insured that there is a gap in coverage.
  • If there is a lapse in coverage on a claims-made policy, prepare offer of Extended Reporting Period (tail) coverage and send to insured.
  • If ERP is accepted and payment is received, REFER TO POLICY CHANGE PROCEDURE.
  • If ERP is not accepted, document file.
  • When reinstatement is received, check for accuracy of dates and document file as appropriate.
  • Clear suspense.