Rewrite

A policy is rewritten the system when there is a material error in the policy. It may happen that sometimes policy is issued with a material error.The word ‘material’ from system perspective. There are some key fields which have the data which is the fundamental for the policy and determine the risk and validations. For example, ‘State’ field in P&C insurance in USA. If there is an error in the state field, this has an impact on the policy issue. Coverages for the specific risk, minimum amount of coverage required, its related validations will go wrong when state was entered incorrectly. Also, the effective date and expiry date is also important. Even the rating calculations is based on the effective date as the rating set may change based on the effective date. So, when key fields have an impact, usually from system perspective insurance companies are not willing to do a policy change to change the transaction.

Example

Let us look at an example , Personal auto policy is a widely regulated policy in USA. A policy was issued wrongly with the state of ‘Tennessee’ instead of Texas. The minimum coverage as per regulatory requiement differs widely in each of the state.So, when system validation happens based on issuing state, system takes a different set of underwriting rules to validate instead of what it is supposed to be. The ‘State’ here is only an example. Based on the specific consideration of the insurance company or the system, the key fields may vary. In an ideal system these key fields are not allowed to be modified through ‘Policy change’ transaction, but allowed only in ‘Rewrite’ transaction. Essentially, the rewrite transaction allows to modify policy to reflect the intent for which the policy is issued.

Types of Re-write

a) Full term rewrite : Full-term rewrite involves rewriting the entire policy from the original effective date. b) Mid term Rewrite. A mid-term rewrite, on the other hand, involves a different effective date for the rewritten policy.