Scope of Policy Administration and Issuing Documents 保單處理的範圍及保險文件的發出
Once underwriting has accepted a risk, the policy administration function takes over the contract's day-to-day running. Its work includes issuing the policy and related documents, billing and collecting premiums, recording mid-term changes, handling renewals, lapses, surrenders and cancellations, and keeping accurate policy records. It works alongside product development, underwriting and claims, but it does not design products or decide whether to accept a risk.
Before the formal policy is ready, general insurers, particularly motor insurers, often issue a cover note as temporary evidence of cover. For motor insurance, the Motor Vehicles Insurance (Third Party Risks) Ordinance (Cap. 272) requires a vehicle owner to have a certificate of insurance, so issuing that certificate is also part of policy administration.
When an insurer issues a long-term (life) policy, it must also tell the policyholder about the right to a cooling-off period. Under the Insurance Authority's guideline on the cooling-off period, the policyholder may cancel within a set period and get the premium back, subject to the adjustments the guideline allows. Policy administration processes these cancellations and refunds.
Changes During the Policy Period 保單期內的更改
In general insurance, changes during the policy period, such as a new address, an added named driver, a higher sum insured or a replacement vehicle, are normally recorded by an endorsement. An endorsement is a written document attached to the policy and forms part of the contract. Where it conflicts with the printed policy wording, the endorsement generally prevails. A change may lead to an additional premium or a refund.
Common life policy alterations include changing the beneficiary, the correspondence address or the premium payment mode (for example from annual to monthly), reducing the sum insured, and registering an assignment of the policy. Some changes, such as increasing the sum insured, bring in new risk and must first be assessed by underwriting.
Not every change can be handled administratively. Replacing the life insured with a different person, for example, means insuring an entirely new risk, so it normally requires a new policy rather than an alteration to the existing one.
Premium Collection, Grace Period and Lapse 保費收取、寬限期及保單失效
Policy administration sends premium notices, collects premiums and follows up arrears. Life policies usually have a grace period, typically around 30 or 31 days, during which a premium paid after the due date still keeps the policy in force. If the life insured dies within the grace period, the insurer still pays the claim but deducts the overdue premium from it.
If the premium is still unpaid when the grace period ends, the policy lapses unless a non-forfeiture option applies. For a policy that has built up a cash value, common options are an automatic premium loan (the cash value is used to pay the premium), conversion to reduced paid-up insurance, or surrender for the surrender value.
A lapsed policy can be reinstated if the policy conditions are met, for example applying within a set period, paying the arrears with interest and providing evidence of insurability. While a policy is in force, the policyholder may also take a policy loan against its cash value. Policy administration handles all of these.
Renewal and Policy Records 續保及保單紀錄
Most general insurance policies run for one year. Before expiry the insurer normally sends a renewal notice showing the renewal premium and terms. In law, a renewal is a new contract, so at renewal the insured must again meet the duty of disclosure under utmost good faith and tell the insurer about any change in material facts during the year. The insurer is also free to decline renewal or change the terms.
Long-term life insurance works differently. As long as the policyholder pays the premiums on time, the policy stays in force, and the insurer cannot refuse to 'renew' it.
Policy administration also includes keeping accurate records of policyholder details, premiums, alterations and claims, which underwriting, claims and customer service all rely on. In handling this personal data, the insurer must comply with the Personal Data (Privacy) Ordinance (Cap. 486).
Practice
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