Risk Clearance

Risk Clearance Explained

Before processing potential insureds, insurance companies first determine whether there is an existing relationship with them. This process is known as risk clearance.

Risk clearance is crucial for a few reasons:

1. Existing Customers: Insurance carriers aim to avoid quoting policies for individuals who are already clients. Quoting a current customer could result in offering a rate higher or lower than their existing one, which can lead to awkward situations.

2.  Multiple Inquiries: Often, individuals seeking insurance will reach out to several agents, who in turn may submit their information to various insurers. Insurers prefer not to provide multiple quotes to the same person to avoid inconsistencies in their offers. They typically adhere to a "first-come, first-served" basis to manage such situations.

The essence of risk clearance is to verify if the insurer already has a relationship with the potential insured. If such a relationship exists, the underwriter may opt not to proceed with a quote.

From a data management perspective, noting down even incomplete submissions is beneficial. In cases where coverage is declined due to an existing or prior submission, it's standard practice to communicate this decision through an email notification to the involved parties. This ensures clarity and maintains transparency in the insurance quoting process.