What Are The
Functions Covered Under Policy Administration For Insurance
If we only take the United States insurance industry into
picture then it is worth $419 billion annually. This magnanimous industry
currently employs over 3 million people out of which nearly 50 percent are
responsible for carrying out policy administration services. What
exactly is this term? And, what are the functions that a policy administrator
must perform?
What Does The Term
Mean?
Before we look at the actual meaning with regards to
Insurance, it would be worthwhile observing the etymology first. Public policy
administration was the first kind of administrative process developed in
the world where a government would set down policies or regulations and ensure
that its citizens abided by it. The same policies in turn would also allow a
government to function within a set framework, preventing it from violating
rights of its citizens. This is the concept that insurance administration
borrows.
Such an administration usually ensures that insurance
contracts are documented, plaintiffs are addressed, claims are investigated and
checks are performed, all within the legal framework of an insurance company.
Basically, everything you see an insurance employee do falls under the vicinage
of insurance administration.
The Functions Or Role
Of Administration With Regards To Insurance Policies
1.
Rating – In order to price or rate policies a very complicated algorithm
is used. This is to ensure that the claim is matched with the risk. Departments
charged with performing this aspect of administration must extrapolate and
tabulate data about crime rates, fire incidents, and other factors before
assigning credit ratings to specific policies. This is what ultimately decides
profits for an insurance agency.
2.
Insurance – What is an insurance company if it does not insure
something? This basic function too falls under the jurisdiction of
administration. By the help of appropriate technology, policies are created and
printed such that the wording accurately reflects the terms and conditions of
the company. This department is also responsible for filing of documents and
archiving them for future reference.
3.
Billing – Consider this administrative duty to be at par with
bookkeeping. Unless an insurance company keeps record of its financial
transactions, it cannot file profits and tax returns, pay its employees and
address claims. Moreover, there are government regulations that must be adhered
to when it comes to keeping reserves, maintaining accounts. These things fall
under the billing department’s responsibilities.
As one can see, policy administration is a large
enough subject on its own. Maybe this is the reason why many agencies have
turned towards computer software to manage some or all of their administrative
requirements.
