New Business(NBS)

New Business involves providing an insurance policy to a client for the first time, regardless of whether the client is an individual, family, or enterprise. This marks the initial stage where an insurance provider acquires a new client and establishes their coverage from
the beginning.

Key Steps in New Business:

Application Submission: The customer submits a request for insurance coverage, providing personal or business information (such as name, address, and risk elements) and specifying the kind of insurance they desire (for example, home, auto, or business insurance).

Premium Assessment:
The insurance company determines the premium according to the customer’s risk profile. Various elements, including age, health status, driving history, condition of the home, and type of business, can affect the amount the policyholder will owe.

Policy Issuance:
When the application is accepted and the conditions are accepted, the insurance company creates a new policy, and the policyholder receives paperwork that contains policy information, premium cost, and coverage conditions.

Renewal(RWL)

Renewal signifies the continuation of a current insurance policy once its initial term has expired. The insurance provider and the policyholder agree to extend the coverage for an additional term, usually on an annual basis, though certain policies may be renewed for different durations, whether shorter or longer.

Key Steps in Renewal:

Renewal Notice: Before the policy’s expiration, the insurer sends a renewal notice to the policyholder, outlining any changes in terms, premiums, or coverage options. This is usually sent a few weeks before the policy’s expiration date.

Review of Policy Details:
The insurer and the policyholder review the current coverage. If there have been any significant changes to the insured’s risk such as a claim history, a new car, or changes in the property’s condition, the renewal premium may be adjusted accordingly.

Premium Adjustment:
If the insurer has experienced claims from the policyholder or if their risk profile has changed (e.g., the insured has added a new vehicle or the home has had renovations), the premium may increase. Conversely, the premium could decrease if there have been fewer claims or risk reductions, such as installing a security system.

Policy Renewal:
If the policyholder agrees to the new terms, the insurer renews the policy for another term. This may involve the same coverage and deductibles as the previous term, or there may be updates based on underwriting and the insurer’s assessment.

Conclusion:
The distinction between new business and renewal in the insurance world is crucial for both insurers and policyholders. New business transactions involve more detailed underwriting and premium calculation since the insurer has no previous relationship with the customer. Renewal, on the other hand, relies on reviewing existing data and adjusting premiums based on claims history and any changes in the customer’s risk profile.

Understanding these processes can help both parties make informed decisions and ensure that coverage is appropriate, fair, and affordable. If you’re approaching your insurance renewal or considering a new policy, knowing the steps involved will help you better navigate the insurance market and make smarter choices.