Overview of Policy Transactions

On a daily basis, producers and agents do work associated with policies. This work includes creating
submissions, changing policies mid-term, and any number of similar activities. In PolicyCenter, you do
this work in policy transactions. Policy transactions play a central role in PolicyCenter.

Policy transactions coordinate all the work associated with creating a new policy period and modifying
the policy. Policy transactions are almost always referred to by type, that is to say, a submission, a policy
change, or a cancellation.

Submissions
The goal of the submission process is to create a policy and have the policyholder accept it. After
entering the policyholder’s information, the producer gives a quote. If the policyholder agrees and
accepts it, then the producer binds the policy and sends it out with the accompanying documentation.
The producer also forwards the billing information to an external billing system (not shown in the
diagram).
Policy Changes
Any changes to a policy can require additional evaluation on the part of an underwriter and result in a
change to the premium. A typical change might include additions to the policy (such as adding drivers or
cars) or changes to coverage limits and deductible amounts.
Renewals
The normal progression just before a policy expires is to renew it for another period of time – six to 12
months is typical. After PolicyCenter renews a policy, it returns the policy to maintenance mode until the
policy changes, expires, cancels, or renews again.
Cancellations and Reinstatements
You can also cancel policies. Before the cancellation processes completes, a cancellation can be
rescinded. An example is a producer mailing a cancellation notice for non-payment to a policyholder. If
the policyholder corrects this by submitting payment before the cancellation date then the cancellation
can be rescinded with no break in coverage.
Reinstatements
Reinstatements go hand in hand with cancellations and are a type of policy change that returns a
canceled policy to in-force status. The policy is in-force as of the reinstatement date. The reinstatement
removes the cancellation from the policy period since the period is no longer canceled. The expiration
date remains the same.
Rewrites
When there are many errors are on a policy, it becomes necessary to rewrite it. Policies must first be
canceled before being rewritten.
Audits
The audit policy transaction lets the carrier verify information about the policyholder so that they can
determine the accuracy of premiums paid. The audit policy transaction provides final audit and premium
reports.
PolicyCenter supports only final audit for the workers’ compensation line of business. You set up the
method of final audit (physical, voluntary, or by phone) when you create the workers’ compensation
policy.
Key Features of Policy Transactions
There are a number of policy transaction features that apply to one or more policy transaction types. In
the following table, the marked cells indicate which features are available for each policy transaction
type in the default application.

The following features are common to various policy transactions:

Preemption
Preemption occurs if there are two or more concurrent policy transactions in process on a policy. When
one policy transaction finishes, the other policy transactions needs to adjust to the fact that the policy
information has changed. The first policy transaction that finishes preempts any other changes in
concurrent policy transactions.

Out-of-sequence Changes and Policy Transactions

PolicyCenter supports out-of-sequence policy transactions. A policy transaction is out-of-sequence if its
effective date is earlier than the effective date of another policy transaction that is already bound on the
policy for that contractual period. PolicyCenter warns you that the policy transaction is out-of-sequence
and prompts you to address any conflicts that occur as a result.
When a policy transaction begins, PolicyCenter checks to see if the transaction is out-of-sequence. The
transaction is out-of-sequence if at least one completed transaction on the policy has an edit effective
date later than the edit effective date of the current policy transaction. So when you click Start either on
the Start Policy Change, Start Cancellation, or Start Reinstatement screens, PolicyCenter displays a
confirmation message about the out of sequence change. If you click OK, then the policy transaction
starts.
Out-of-Sequence Policy Transaction Combinations
Since there are many different types of policy transactions, it is helpful to know which policy
transactions may be out-of-sequence with respect to another. The following table shows all possible
pairs of policy transactions. A cell marked in row X and column Y indicates that policy transaction X may
be out-of-sequence with respect to policy transaction Y. Policy transaction X may be started and
completed even if its edit effective date is earlier than the edit effective date of a previously bound
policy transaction Y.

Note the following:

• Cancellation and reinstatement – When you cancel or reinstate a policy, you cannot make additional
changes to that policy. Therefore, if a policy transaction is out-of-sequence with respect to a
cancellation or reinstatement policy transaction, there are no conflicts to resolve.
• Rewrite – If rewrite is out-of-sequence with respect to renewal, then you receive a warning that the
rewrite changes are not applied to the renewal.
• Submissions, issuances, and rewrite new account – Can never be future-bound policy transactions.
• Submissions – Can never be out-of-sequence because no policy exists until a submission is complete.
• Renewals – Can never be out-of-sequence because no other policy transactions with later effective
dates can be started until the renewal completes. However, if PolicyCenter promotes a renewal period,
then any subsequent policy transaction in the expiring period will always be out-of-sequence with
respect to the renewal.
• Audits – Since PolicyCenter never promotes audit branches, they are never in an out-of-sequence
relationship.
• Rewrite new account – If rewrite new account is out-of-sequence to another policy transaction, the
Out-of-sequence policy transaction occurred on the source policy. (Remember that rewrite new account
Rewrites a source policy to a new target policy on a different account.) That out-of-sequence policy
transaction is a transaction on the source policy but not on the target policy. However, both the source
and target policies have a slice representing the out-of-sequence policy transaction.
Note: Only cancellation policy transactions can be started on non-issued policies.