Cancellations - Why So Restrictive? By Matt Roberts
We recently updated the cancellation feature in insurengine to allow you to enter a cancellation date. I thought I would explain why this was a long time coming and the restrictions we’ve put in place.
A much needed update
Previous to the update, cancellations were effective at the moment the cancel button was pressed. This was always today’s date – you couldn’t choose.
Brokers have been asking for the ability to input custom cancellation dates. Although the feature is there now, we were reluctant to include it at first.
Even now, we have placed restrictions on the dates you can choose. Some people might be wondering why you can’t put just any date. Why the caution? The issue is with back-dated cancellations.
The problems with back-dated cancellations
- Underwriters allocate financial capacity for the cover period of a policy. They may turn down new policies if they believe they have already reached that capacity. If later it turns out a policy was not active for that period, they have effectively lost revenue from the policies they rejected.
- Brokers pay underwriters in order to cover their clients. If a policy is no longer on cover, the broker can stop paying. If the broker can say the customer was not covered for a long period, or was never covered, they may request money back from the underwriter.
Basically, by playing fast and loose with cancellation dates, insurengine could allow brokers to “game the system”.
Of course, we’re not suggesting that any of our clients would do that!
But on a serious note, we didn’t want to create a system that would allow brokers to get into trouble, even by accident. And we didn’t want a system that underwriters would frown upon.
Of course there are times when as a broker you may need to change a cancellation date. For example:
- A customer cancelled at the weekend – no one was at the office, but they left a message requesting cancellation with immediate effect.
- Post – if someone cancels by “snail mail” there may be a delay in getting the letter to you, but you still want to honour the cancellation date requested.
- Holidays – a lot of our clients are small brokers, and if someone goes on holiday who would normally be responsible for cancellations, well, things get missed – we’re all human!
- Forward planning – a particularly pro-active customer or broker may want to register a cancellation in advance. After all, if someone phones up to cancel next week it would be nice to have a way to do it.
So there needs to be some wiggle-room, but we must also reassure underwriters that insurengine doesn’t allow anyone to fiddle the system. The compromise is that we allow insurengine users to input cancellation dates, with restrictions.
Cancellations can be booked in advance, with a future date, or they can be given a date in the past up to a week. We reckon that’s long enough to cover any of the eventualities above (but of course we are open to suggestions).
So I hope that clears things up. Look out for more info on insurengine’s features in the future.
What do you think about our choice of implementation? How is your back-office system handling cancellations? Let us know in the comments below!By Matt Roberts