Underwriting holds for natural disasters

PolicyCenter provides underwriting policy holds for natural disasters. You can base the policy hold on written date or effective date.

When a natural disaster is impending or in progress, an insurer may decide not to bind any new policy transactions in that region before or after the natural disaster. The insurer does not want to write new policies until the natural disaster passes and the losses are assessed. As the natural disaster progresses and the potential losses change, the insurer may need to modify the underwriting hold.

For example, the weather service predicts that a hurricane will hit the state of Hawaii. The state of Hawaii consists of five counties. The weather forecast says that the hurricane threatens only Kauai County. Customers start calling in to add flood coverage to their policy. The insurer puts an underwriting policy hold on Kauai County so that agents cannot add that coverage. The insurer does not set a hold end date because the storm’s progress and amount of time to assess damages are unknown.

On the second day, the storm has not yet hit Kauai County. However, the hurricane now also threatens Honolulu County and part of Maui County. The insurer adds those counties to the underwriting hold. Because the storm has not yet arrived, the insurer updates the hold start date to the current date.

On the third day, the hurricane bypasses Kauai County but still threatens Honolulu County and part of Maui County. The insurer removes Kauai County from the policy hold and updates the hold start date to the current date.

One week later, the hurricane has passed. The hurricane damaged Honolulu County only. The insurer updates the hold region to Honolulu County only. Because the insurer has not assessed the full extent of damages, the insurer is not yet ready to write policies in Honolulu County. Therefore, the insurer does not set the hold end date.

Three weeks later, the insurer has assessed all damage from the hurricane. The insurer sets the hold end date to the current date. The insurer leaves the policy hold in place to protect against someone trying to obtain insurance for the hurricane after the hurricane has passed. For more information, see Prevent back-dating policy transaction to avoid underwriting hold.

If, on the other hand, the hurricane completely bypassed the state of Hawaii, the insurer disables or deletes the policy hold. If policy transactions had been held as a result of the policy hold, PolicyCenter automatically releases them and notifies the appropriate users.