When is it necessary to re-underwrite a policy?

Re-underwriting a policy becomes necessary when there is an adverse loss experience. Adverse loss experience refers to a situation where the claims made against a policy exceed what was anticipated during the underwriting process. This change in risk profile may indicate that the original underwriting assumptions are no longer valid, requiring a reassessment of the policy terms, coverage, and premiums.

In the context of risk management, insurers regularly evaluate their portfolios based on actual loss experiences. If a policyholder has experienced significant claims, the insurer needs to reassess the associated risks and determine if the current coverages are adequate or if changes are required to mitigate further losses.

Re-underwriting during policy renewal may also occur, but that is not the only time it is necessary, as adverse loss experiences can happen at any point in the policy cycle. Initial underwriting focuses on evaluating risk before the policy is issued, while losing a client does not necessitate re-underwriting but may influence business decisions and client management strategies.