ACORD Standards RLC Reinsurance Placing Implementation Guide

RENEWAL PROCESSING WORKFLOWVERSION 1.0DECEMBER 1, 2009References: ACORD AL3 – June 2008 and ACORD P&C/Surety XML v1.14.0IMPORTANT NOTE: This document contains or relates to ACORD Standard Property & Casualty/Surety. Youare not authorized to use the ACORD Standard contained in this document unless you have accepted the termsand conditions of the Standards License accessible at http://legal.acord.org/standards_license.htm. To gain suchauthorization, please go to that site and, if you agree with the terms and conditions of the Standards License,enter whatever information is called for, if any, and click on "Accept".New YorkTwo Blue Hill Plaza3 rd FloorPearl River, NY 10965-8529U.S.A.LondonLondon Underwriting CentreSuite 1/33 Minster CourtMincing LaneLondon EC3R 7DDUnited Kingdom© 2001-2009 ACORD CORPORATION – ALL RIGHTS RESERVED.

TABLE OF CONTENTS1 EXECUTIVE SUMMARY ............................................................................................................... 31.1 PREFACE ................................................................................................................................. 31.2 INTENDED AUDIENCE ................................................................................................................ 31.3 FEEDBACK ............................................................................................................................... 32 INTRODUCTION ............................................................................................................................ 42.1 PURPOSE OF THIS GUIDE .......................................................................................................... 42.2 ACORD STANDARDS OVERVIEW .............................................................................................. 42.2.1 Resources Available – Getting Help ................................................................................. 42.2.2 Purpose of Implementation Guides ................................................................................... 42.2.3 Implementation Reporting ................................................................................................. 52.2.4 Certification ........................................................................................................................ 52.3 RFC2119 COMPLIANCE ........................................................................................................... 53 BUSINESS OBJECTIVES AND EXPECTED BENEFITS ............................................................. 63.1 OBJECTIVES AND PROBLEM DESCRIPTION ................................................................................. 63.2 BUSINESS PROCESS(ES) SUPPORTED ....................................................................................... 63.3 VALUE PROPOSITION ................................................................................................................ 63.4 SCOPE .................................................................................................................................... 64 COMMON SCENARIOS ................................................................................................................ 74.1 INTRODUCTION ......................................................................................................................... 74.2 RENEWAL - AUTOMATIC ............................................................................................................ 74.2.1 Definition ............................................................................................................................ 74.3 RENEWAL OFFER - AUTOMATIC ................................................................................................. 84.3.1 Definition ............................................................................................................................ 84.4 RENEWAL OFFER – NON AUTOMATIC ........................................................................................ 84.4.1 Definition ............................................................................................................................ 84.5 RENEWAL QUOTE NOT ACCEPTED BY INSURED ......................................................................... 94.5.1 Definition ............................................................................................................................ 94.6 RENEWALS - AUTOMATIC - ADDITIONAL BUSINESS REQUIREMENTS ........................................... 104.6.1 Definition .......................................................................................................................... 104.7 AGENCY USE OF MGA/WHOLESALER RENEWAL PROCESS ...................................................... 104.7.1 Definition .......................................................................................................................... 105 FLOW DIAGRAMS ...................................................................................................................... 125.1 INTRODUCTION ....................................................................................................................... 125.1.1 Renewal – Automatic ...................................................................................................... 135.1.2 Renewal Offer – Automatic ............................................................................................. 155.1.3 Renewal Offer - Non Automatic ....................................................................................... 175.1.4 Renewal Offer Not Accepted By Insured ........................................................................ 195.1.5 Renewals – Automatic - Additional Business Requirements .......................................... 215.1.6 Agency Use Of MGA/Wholesaler Renewal Process ....................................................... 236 AL3 STRUCTURE........................................................................................................................ 256.1 AL3 DETAILS ......................................................................................................................... 256.1.1 2TRG Transaction Header Group ................................................................................... 256.1.2 2TRG25: Cycle/Business Purpose .................................................................................. 257 INDEX AND GLOSSARY ............................................................................................................ 277.1 INDEX .................................................................................................................................... 277.2 GLOSSARY............................................................................................................................. 277.2.1 Renewal ........................................................................................................................... 277.2.2 Renewal Quote ................................................................................................................ 277.2.3 Automatic Renewals ........................................................................................................ 277.2.4 Non-Automatic Renewals ................................................................................................ 277.2.5 Audit (often occurs at renewal) ........................................................................................ 288 REVISION HISTORY/CHANGE SUMMARY ............................................................................... 29© 2001 – 2009 ACORD CORPORATION – ALL RIGHTS RESERVEDACORD PCS RENEWAL PROCESSING WORKFLOW VERSION 1.02

Implementation Guidelines are published in order to provide practical assistance to Standards usersbased upon the experience of earlier users. It is intended that no conflict exist between informationcontained in any ACORD Standards and Implementation Guidelines. In the event of any suchconflict, the applicable Standard wording will prevail.ACORD Standard Implementation Guidelines are designed to help developers of systems usingACORD Standards familiarize themselves with the Standards process and how Standards are beingused in actual systems.The Guidelines represent the consensus of ACORD standards participants on how the ACORDStandards are meant to be used. They originate in response to specific questions or issues thatsurface in the process of developing or implementing Standards.2.2.3 Implementation ReportingStandards aren’t truly relevant until they are used. To help drive the use of Standards, and to let thoseorganization who have adopted Standards know who else has too, ACORD publishes a regularlyupdated schedule of all the organizations using Standards and which BusinessMessages/Transactions they support. The Online Adoption and Reporting Survey (OARS) report canbe found on the ACORD web site – www.acord.org.As you develop and implement your messages, please report them to ACORD. The web site includesan Implementation Survey (OARS) to indicate the ACORD Standard (Life, P&C, and Reinsurance &Large Commercial) and messages that you have in development, pilot, or production.2.2.4 CertificationBeyond reporting who has implemented Standards, which is by definition a self-reporting exercise,ACORD offers a Certification Process for all its messages. This provides members with the addedacknowledgement of their use of Standards and furthermore notifies other potential clients/tradingpartners of their ability to support well-formed, compliant ACORD messages.Having all trading partners certify their messages makes implementation much easier, faster andallows a third, neutral party (ACORD) to provide reconciliation of implementation ambiguities (andresolve these in future versions of the Standards).To get certified, or to get more information, visit the ACORD web site, Members Area for more details– or feel free to contact an ACORD for assistance (www.acord.org).2.3 RFC2119 ComplianceThis document conforms to the IETF RFC2119 (www.ietf.org/rfc/rfc2119.txt) standard regardingdefinition of keywords such as words “MUST”, “MUST NOT”, “REQUIRED”, “SHALL”, “SHALL NOT”,“SHOULD”, “SHOULD NOT”, “RECOMMENDED”, “MAY”, and “OPTIONAL”. Each instance of thisword, whether upper, lower or mixed case, must be interpreted following the meanings defined inRFC2119. Thus the usage of these key words is not case-sensitive. If an alternate meaning isintended then you MUST NOT use one of these words and find a suitable synonym representative ofthe intended meaning.© 2001 – 2009 ACORD CORPORATION – ALL RIGHTS RESERVEDACORD PCS RENEWAL PROCESSING WORKFLOW VERSION 1.05

3 BUSINESS OBJECTIVES AND EXPECTED BENEFITS3.1 Objectives and Problem DescriptionThere are multiple scenarios for the handling of insurance policy renewals. Reasons for the variancescan be associated with product/policy design as well as related regulatory requirements. Varyingscenarios act to complicate the related workflow management from the producer communityperspective (e.g. agents, brokers) as they attempt to manage their policy and customer information.3.2 Business Process(es) SupportedRenewal QuoteAutomatic RenewalsNon-Automatic RenewalsAudit (often occurs at renewal)MGA, Wholesaler and Excess Surplus Lines renewals3.3 Value PropositionThe more efficient process for renewals allows for less paper. Reduced paper between the carrierand the agent allows for reduced cost on both ends. Agents need accurate data in their systems anddownload is the key for accurate and consistent data. The preferred flows outlined in this guideprovide efficiency on both ends and less chance of an E&O as the data is accurate and the steps aremore streamlined.3.4 ScopeImplementers should agree with each other which messages will be exchanged and how attachmentswill be transmitted. This can either be done bilaterally between trading partners or more appropriatelyon a market-basis.© 2001 – 2009 ACORD CORPORATION – ALL RIGHTS RESERVEDACORD PCS RENEWAL PROCESSING WORKFLOW VERSION 1.06

4 COMMON SCENARIOS4.1 IntroductionWhile the basic flow remains common across geographies and lines of business, differentcommunities of companies or markets commonly use different terminology and discrete sub-flows. Toaid implementers, for all flows, several scenarios are identified and set out below, identifying keyterms, counter-parties and flows:Renewal AutomaticRenewal Offer AutomaticRenewal Offer Non AutomaticRenewal Quote Not Accepted By InsuredRenewals Automatic – Additional Business RequirementsAgency Use of MGA/Wholesaler Renewal ProcessNOTE:In each of the XML Message Name boxes, you will notice LOBXXX. Because each message in PCS1.x is specific to a line of business, we are notating this as LOBXXX.4.2 Renewal - AutomaticGeographiesParticipantsUSAThe client is the insured and the carrier is an insurer. The client may engage anagent as their intermediary.4.2.1 DefinitionThis scenario illustrates the preferred process for a policy automatically renewed and delivered by acarrier. These are typically, but not exclusively, personal lines policies - e.g., personal auto andhomeowners..Paper AL3 – 2TRG25 –Cycle/Business PurposeCodeInsurer sends renewalRWL (Renewal Image)declarations pages topolicyholder (may also sendcopy to the agency unlesspaper has been turned off).XMLLOBXXXPolicyRenewRq© 2001 – 2009 ACORD CORPORATION – ALL RIGHTS RESERVEDACORD PCS RENEWAL PROCESSING WORKFLOW VERSION 1.07

4.3 Renewal Offer - AutomaticGeographiesParticipantsUSAThe client is the insured and the carrier is an insurer. The client may engage anagent as their intermediary.4.3.1 DefinitionThis scenario illustrates the preferred process for a renewal where the carrier automatically quotes,but does not issue, the renewal. The actual renewal occurs only when the agency accepts the offer torenew. This process is generally seen only with commercial lines policies, but not all commercialpolicies. For many commercial policies, a renewal offer must be requested by the agent. Therequest for renewal offer is illustrated in a separate workflow.Paper AL3 – 2TRG25 –Cycle/Business PurposeCodeInsurer sends renewalRWL (Renewal Image)declarations pages topolicyholder (may also send copyto the agency unless paper hasbeen turned-off).XMLLOBXXXPolicyRenewRq4.4 Renewal Offer – Non AutomaticGeographiesParticipantsUSAThe client is the insured and the carrier is an insurer. The client may engagean agent as their intermediary.4.4.1 DefinitionIn this scenario, a renewal quote is requested by the agent, but the policy does not automaticallyrenew. If the payment is not received at the expiration date the policy lapses. Upon receipt of thepayment the policy will be issued using that effective date vs. the expiration date of the policy. Insome cases the renewal can be issued without a lapse provided the insured sends a letter statingthey have no known losses.Paper AL3 - 2TRG25 –Cycle/Business PurposeCodeInsurer sends renewal offer #1 RWQ (Renewal Quote)Usually sent X days in advanceof renewalInsurer sends renewal offer #2 No downloadThis one is sent after theexpiration date and gives a graceXMLLOBXXXPolicyRenewRq© 2001 – 2009 ACORD CORPORATION – ALL RIGHTS RESERVEDACORD PCS RENEWAL PROCESSING WORKFLOW VERSION 1.08

Paper AL3 - 2TRG25 –Cycle/Business PurposeCodeperiod to send payment and arenewal will be considered, butno losses would be covered inthe meantimePayment Received – renewal RWL (Renewal Image)issuedPreferred Handling:Download: XQU (Cancellationof Pending Quote)XML4.5 Renewal Quote Not Accepted By InsuredGeographiesParticipantsUSAThe client is the insured and the carrier is an insurer. The client may engage anagent as their intermediary.4.5.1 DefinitionIn this scenario, a renewal quote is provided and if no payment is received, the insurer who offeredthe renewal quote follows-up with an electronic cancellation to the producer (no paper created for theagency or the policyholder).Paper AL3 - 2TRG25 –Cycle/Business PurposeCodeInsurer sends renewal offer #1 RWQ (Renewal Quote)Usually sent X days in advance ofrenewalNo second renewal offer is given Download: XLC (CancellationConfirmation)Policy is no longer active, butit is in the “wrong” statebecause it should showedexpired on the prior term, notcancelled flat as though therewas a flat cancel on renewal.XMLPolicyPartialImageCancelRqPreferred Handling:Download: XQU (Cancellationof Pending Quote)© 2001 – 2009 ACORD CORPORATION – ALL RIGHTS RESERVEDACORD PCS RENEWAL PROCESSING WORKFLOW VERSION 1.09

4.6 Renewals - Automatic - Additional Business RequirementsGeographiesParticipantsUSAThe client is the insured and the carrier is an insurer. The client may engagean agent as their intermediary.4.6.1 DefinitionIn this scenario we provide a suggested roadmap for renewal process where the renewal may beautomatically generated by the company, broker, or outside source. The renewal process isautomatic, the process triggers in advance of the current term expiration with delivery either directly tothe insured for acceptance or to the agent/producer for delivery to the insured for acknowledgementof desire to continue the coverage. The issuing company may or may not require additional stepsby the agent/producer of additional underwriting information; the confirmation of the policy contract isalways required in the form of payment from the insured. Once the policy is accepted agencypersonnel should follow agency outlined procedures for documentation into the internal managementsystem.Paper AL3 - 2TRG25 –Cycle/Business PurposeCodeXMLLOBXXXPolicyRenewRq4.7 Agency Use Of MGA/Wholesaler Renewal ProcessGeographiesParticipantsUSAThe client is the insured and the carrier is an insurer. The client may engagean agent as their intermediary.The agent may engage a broker as their intermediary.4.7.1 DefinitionIn this scenario, the renewal is sent from the carrier to the MGA. The MGA forwards the renewal tothe agency's management system; usually electronic mailboxes are setup to automatically forward therenewal to the agency. The renewal must be requested.If the MGA is getting the renewal from the carrier, they need to get their commission, so thecommission is pulled out, and then the commission gets adjusted again. Premium records may alsobe adjusted (taxes, etc). On paper, whoever is doing the filing is responsible for the taxes and fees. Ifthe retail agent is licensed, they are adjusting the taxes at the end, otherwise that is taken care of atthe beginning of the stream.© 2001 – 2009 ACORD CORPORATION – ALL RIGHTS RESERVEDACORD PCS RENEWAL PROCESSING WORKFLOW VERSION 1.010

Paper AL3 - 2TRG25 –Cycle/Business PurposeCodeInsurer sends renewal offer #1 RWQ (Renewal Quote)Usually sent X days in advance ofrenewalInsured paysRWL (Renewal Image)Insured chooses to cancel XLC (CancellationConfirmation)XMLLOBXXXPolicyRenewRq© 2001 – 2009 ACORD CORPORATION – ALL RIGHTS RESERVEDACORD PCS RENEWAL PROCESSING WORKFLOW VERSION 1.011

5 FLOW DIAGRAMS5.1 IntroductionThe following pages document the flows for each of the processes identified in §4 above.Each process is documented in the same manner. There are two flows for each scenario. The firstone contains the entire flow of the process; the second diagram contains ONLY the preferred path.Each item in the preferred path is shaded GREEN.© 2001 – 2009 ACORD CORPORATION – ALL RIGHTS RESERVEDACORD PCS RENEWAL PROCESSING WORKFLOW VERSION 1.012

5.1.1 Renewal – Automatic5.1.1.1 Complete PathRenewal - AutomaticRenewal TermAutomatically Generated # Days in advance of current term expiration.(# = count of days – varies based on policy type and/or regulatory requirements)Ed. Date: July 2, 2009© ACORD 2009Preferred Path = Green ShadeNoIs there an optionfor renewaldelivery otherthan paper?YesIs delivery simple e-file (e.g. PDF versionof paper) orstructured datadesigned for re-use?While the structuredmessaging is the preferredworkflow, the PDF version ofthe policy is necessary toprovide documentation for apaperless agency.Renewal Declarations Pages (paper)delivered via postal mail to thepolicyholder and related parties on thecontract (e.g. mortgagee, producer, etc.).Renewal (e.g. PDF)posted to website for accessRenewal (structured ACORD XML or AL3)posted to website/mailbox for access.Insurer notifies applicableparties that renewal efile(s)available and how to access.YesDoes insurer notifyapplicable parties thatrenewal efile(s)available and how toaccess?NoVia appropriate security measures,requestor (usually the producer)independent of notification accesseswebsite/mailbox to download renewaltransactionVia appropriate securitymeasures, requestor accesseswebsite/mailbox and thenmanages accordingly(e.g. e-file, t-file, print & file, etc.)Is renewal e-filedesigned to allow forautomated systemupdates and datasynchronization?YesNoRecipient reviewsdocumentation– files as needed.Does recipient of therenewal need to update arepository or system thatmanages policy/renewaldata?YesHas paper been“turned-off” atsource (insurer)?YesStaff manage e-file(s) via appropriate filingtechniques and/or manually key nonimportablerenewal data into managementsystem.Some data may not have a home in themanagement system and may thereforerequire manual work outside that system.NOTE: Staff must also be mindful oforganization filing techniques for sourcematerials (e.g. paper renewal dec pages)NoACORD Data TransferData imported into agency system(no manual entry)results in insurer and agencysystems being in-synch withoutmanual work (no re-keying ofdata)NoAgency customer/policymanagement systemStaff must manage receipt of paper in addition to manual entry(inputting data to management system) and be mindful oforganization filing techniques for source materials (e.g. paperrenewal dec pages).(e.g. Resuling work: e-file or t-file).© 2001 – 2009 ACORD CORPORATION – ALL RIGHTS RESERVEDACORD PCS RENEWAL PROCESSING WORKFLOW VERSION 1.013

5.1.1.2 Preferred PathRenewal - AutomaticRenewal TermAutomatically Generated # Days in advance of current term expiration.(# = count of days – varies based on policy type and/or regulatory requirements)Ed. Date: July 2, 2009© ACORD 2009While the structuredmessaging is the preferredworkflow, the PDF version ofthe policy is necessary toprovide documentation for apaperless agency.Renewal (e.g. PDF)posted to website for accessPreferred Path = Green ShadeRenewal (structured ACORD XML or AL3)posted to website/mailbox for access.Via appropriate security measures,requestor (usually the producer)independent of notification accesseswebsite/mailbox to download renewaltransactionACORD Data TransferData imported into agency system(no manual entry)results in insurer and agencysystems being in-synch withoutmanual work (no re-keying ofdata)Agency customer/policymanagement system© 2001 – 2009 ACORD CORPORATION – ALL RIGHTS RESERVEDACORD PCS RENEWAL PROCESSING WORKFLOW VERSION 1.014

5.1.2 Renewal Offer – Automatic5.1.2.1 Complete PathRenewal Offer – AutomaticInsurer sends renewal offer #1, usually sent X days in advance of renewal.In some cases, this is considered a “Renewal Quote” - an offer of the renewal and relatedinformation (but not an actual renewal)This is done automatically – neither the policyholder nor the producer have requested it.Ed. Date: Sept 4, 2008© ACORD 2008Preferred Path = Green ShadeNoIs the renewaloffer available ina format otherthan paper?YesIn this scenario, a renewal quote isprovided, but the policy does notautomatically renew. Ideally, therenewal quote is provided to theproducer via download and whenpayment is received, the renewaltransaction is also downloaded.Is delivery simple e-file (e.g. PDF versionof paper) or structureddata designed for reuse?Renewal Declarations Pages(paper) delivered via postalmail to the policyholder andrelated parties on the contract(e.g. mortgagee, producer,etc.).Renewal Offer (e.g. PDF)posted to website for accessInsurer notifies applicable partiesthat renewal offer efile(s) availableand how to access.YesDoes insurer notifyapplicable parties thatrenewal offer efile(s)available and how toaccess?Renewal Offer (structured ACORD XML or AL3)posted to website/mailbox for access.NoVia appropriate security measures,requestor (usually the producer)independent of notification accesseswebsite/mailbox to download renewaltransactionVia appropriate security measures, requestoraccesses website/mailbox and then managesaccordingly(e.g. e-file, t-file, print & file, etc.)NoDoes recipient of therenewal offer need toupdate a repository thatmanages policy/renewaldata?YesNoIs renewal offer e-filedesigned to allow forautomated systemupdates and datasynchronization?YesYesYesIs renewalofferaccepted?NoStaff manually key non-importable renewal offer data into management system.Some data may not have a home in the management system and maytherefore requires manual work outside that system.NOTE: Staff must also be mindful of organization filing techniques for sourcematerials (e.g. paper renewal dec pages)ACORD Data TransferData imported into agencysystem (no manual entry)results in insurer and agencysystems being in-synchwithout manual work (no rekeyingof data)YesIs a paymentrequired toinitiate therenewal?NoInsurer sendsadditional renewalofferYesIs there aregulatoryrequirement foran additionalrenewal offer?NoNoDid customerexplicitlydecline therenewal offer?YesPaymentReceived?YesRenewal IssuedYesDoes Insurerprovide anadditionalrenewal offer?NoNoInsurer cancelsfor non-paymentRenewal Quote Expires /No renewal of the policyoccurs.NoDownloadSupported?YesManage PaperInsurer downloads ACORDtransaction that makes clearthe status of the policy(expiration, renewal, etc).Agency customer/policymanagement systemInsurer sends renewal offer #2.This one is sent after the expirationdate and gives a grace period to sendpayment and a renewal will beconsidered, but no losses would becovered in the meantimeWould like to receive a cancellationcode or new code that would act asinstructions to the agencymanagement system to put the policyback into its prior term and display asa closed policy that expired at the endof the prior term.© 2001 – 2009 ACORD CORPORATION – ALL RIGHTS RESERVEDACORD PCS RENEWAL PROCESSING WORKFLOW VERSION 1.015

5.1.2.2 Preferred PathRenewal Offer – AutomaticInsurer sends renewal offer #1, usually sent X days in advance of renewal.In some cases, this is considered a “Renewal Quote” - an offer of the renewal and relatedinformation (but not an actual renewal)This is done automatically – neither the policyholder nor the producer have requested it.Ed. Date: August 6, 2009© ACORD 2009Preferred Path = Green ShadeNoIs the renewaloffer available ina format otherthan paper?YesIn this scenario, a renewal quote isprovided, but the policy does notautomatically renew. Ideally, therenewal quote is provided to theproducer via download and whenpayment is received, the renewaltransaction is also downloaded.Is delivery simple e-file (e.g. PDF versionof paper) or structureddata designed for reuse?Renewal Offer (e.g. PDF)posted to website for accessRenewal Offer (structured ACORD XML or AL3)posted to website/mailbox for access.Insurer notifies applicable partiesthat renewal offer efile(s) availableand how to access.YesDoes insurer notifyapplicable parties thatrenewal offer efile(s)available and how toaccess?Via appropriate security measures, requestoraccesses website/mailbox and then managesaccordingly(e.g. e-file, t-file, print & file, etc.)Is renewal offer e-filedesigned to allow forautomated systemupdates and datasynchronization?YesInsurer sends renewal offer #2.This one is sent after the expirationdate and gives a grace period to sendpayment and a renewal will beconsidered, but no losses would becovered in the meantimeWould like to receive a cancellationcode or new code that would act asinstructions to the agencymanagement system to put the policyback into its prior term and display asa closed policy that expired at the endof the prior term.ACORD Data TransferData imported into agencysystem (no manual entry)results in insurer and agencysystems being in-synchwithout manual work (no rekeyingof data)Insurer downloads ACORDtransaction that makes clearthe status of the policy(expiration, renewal, etc).Agency customer/policymanagement system© 2001 – 2009 ACORD CORPORATION – ALL RIGHTS RESERVEDACORD PCS RENEWAL PROCESSING WORKFLOW VERSION 1.016

5.1.3 Renewal Offer - Non Automatic5.1.3.1 Complete PathRenewal Offering – Non AutomaticEd. Date: Aug 07, 2008© ACORD 2008In this scenario, a renewal quote is provided, but the policy does not automatically renew. The renewal quote is providedto the producer via download and when payment is received, the renewal transaction is also downloaded.Preferred Path = Green ShadeInsurer sends renewal offer #1, usually sent X days in advance of renewalYESPaymentReceived?Renewal IssuedNOInsurer sends renewal offer #2This one is sent after theexpiration date and gives a graceperiod to send payment and arenewal will be considered, but nolosses would be covered in themeantimeWould like to receive acancellation code or new code thatwould act as instructions to theagency management system toput the policy back into its priorterm and display as a closedpolicy that expired at the end ofthe prior term.NOPaymentReceived?YESRenewal IssuedNoDownloadSupported?YesManage PaperInsurer downloads ACORDtransaction that makes clearthe status of the policy(expiration, renewal, etc).Agency customer/policymanagement system© 2001 – 2009 ACORD CORPORATION – ALL RIGHTS RESERVEDACORD PCS RENEWAL PROCESSING WORKFLOW VERSION 1.017

5.1.3.2 Preferred PathRenewal Offering – Non AutomaticEd. Date: Aug 06, 2009© ACORD 2009In this scenario, a renewal quote is provided, but the policy does not automatically renew. The renewal quote is providedto the producer via download and when payment is received, the renewal transaction is also downloaded.Preferred Path = Green ShadeInsurer sends renewal offer #1, usually sent X days in advance of renewalYESPaymentReceived?Renewal IssuedNOInsurer sends renewal offer #2This one is sent after theexpiration date and gives a graceperiod to send payment and arenewal will be considered, but nolosses would be covered in themeantimeWould like to receive acancellation code or new code thatwould act as instructions to theagency management system toput the policy back into its priorterm and display as a closedpolicy that expired at the end ofthe prior term.NOPaymentReceived?YESRenewal IssuedDownloadSupported?YesInsurer downloads ACORDtransaction that makes clearthe status of the policy(expiration, renewal, etc).Agency customer/policymanagement system© 2001 – 2009 ACORD CORPORATION – ALL RIGHTS RESERVEDACORD PCS RENEWAL PROCESSING WORKFLOW VERSION 1.018

5.1.4 Renewal Offer Not Accepted By Insured5.1.4.1 Complete PathEd. Date: Jan 28, 2009© ACORD 2008Renewal Quote not Accepted by Insured – Insurer sends electronic cancellationIn this scenario, a renewal quote is provided and if no payment is received, the insurer may (optional –varies by insurer and LOB) send an additional renewal offer. If the insured does not pursue the offer,the insurer needs to make clear the termination of this process as a service for the producer (refer topreferred path below for methodology).NOTE: For some lines of business there may or may not be a concluding notification of no coverage/termination to the insured. For example, the renewal offer may state what occurs if the insured does notpursue the offer, which may result in an automatic termination of coverage as stated (no additionalcommunication required on the part of the insurer to the insured).Preferred Path = Green ShadeInsurer sends renewal offer #1 Usually sent X days in advance of renewal –Refer to “Renewal Offer Automatic” for workflow on presentation of renewal quote.YesDid CustomerFormally RejectRenewal Offer?NoEmailFaxDoes Insurer OfferAdditional RenewalQuote?YesWhich notificationmethod(s) areprovided by theinsurer?PhoneNoPost toinsurerwebsiteACORD DataStandardNoDoes Insurer FormallyCancel Renewal QuoteYesWhich notificationmethod(s) areprovided by theinsurer?Postal MailPhone Fax EmailPost toinsurerwebsiteACORD DataStandardAgentAgency must be prepared for thisscenario via diary system that eitherautomatically places policy inexpected expired state, or reach samevia manual process.Recipient of Notification acts on it.Requires manual process.For example – agency staff must initiate updates in localagency systemCustomerRelated Parties/Additional InterestsAgentInsurerdownloadsACORDtransactionthat makesclear thestatus of thepolicy(expiration,renewal, etc).Methods of Notification1. Paper (Mail/Fax)2. Email3. Post to insurer website4. ACORD Data Standard Notification (AL3/XML)Preferred method=4==============================Renewal Quote OfferAL3 2TRG25 Cycle Business Purpose CodeRWQ = Renewal Quote==============================If a second renewal quote is offered, it also is sent with 2TRG25 code RWQ.NOTE: If the additional offer is for Flood, there is agreement because of time requirements unique toflood that an electronic transaction is not necessary (do not send a second renewal offer for flood).=================================AL3 2TRG25 Cycle Business Purpose Code = XQU (Cancellation Of Pending Quote) The 2TRG33Transaction Effective Date would be the 5BPI37 Policy Effective Date to mimic a flat cancellation onrenewal.NoDownloadSupported?YesManage PaperInsurer downloads ACORDtransaction that makes clearthe status of the policy(expiration, renewal, etc).Agency customer/policymanagement system© 2001 – 2009 ACORD CORPORATION – ALL RIGHTS RESERVEDACORD PCS RENEWAL PROCESSING WORKFLOW VERSION 1.019

5.1.4.1 Preferred PathEd. Date: August 6, 2009© ACORD 2009Renewal Quote not Accepted by Insured – Insurer sends electronic cancellationIn this scenario, a renewal quote is provided and if no payment is received, the insurer may (optional –varies by insurer and LOB) send an additional renewal offer. If the insured does not pursue the offer,the insurer needs to make clear the termination of this process as a service for the producer (refer topreferred path below for methodology).NOTE: For some lines of business there may or may not be a concluding notification of no coverage/termination to the insured. For example, the renewal offer may state what occurs if the insured does notpursue the offer, which may result in an automatic termination of coverage as stated (no additionalcommunication required on the part of the insurer to the insured).Preferred Path = Green ShadeInsurer sends renewal offer #1 Usually sent X days in advance of renewal –Refer to “Renewal Offer Automatic” for workflow on presentation of renewal quote.YesDid CustomerFormally RejectRenewal Offer?NoDoes Insurer OfferAdditional RenewalQuote?YesWhich notificationmethod(s) areprovided by theinsurer?NoACORD DataStandardYesDoes Insurer FormallyCancel Renewal QuoteWhich notificationmethod(s) areprovided by theinsurer?ACORD DataStandardRecipient of Notification acts on it.Requires manual process.For example – agency staff must initiate updates in localagency systemCustomerRelated Parties/Additional InterestsAgentInsurerdownloadsACORDtransactionthat makesclear thestatus of thepolicy(expiration,renewal, etc).Methods of Notification1. Paper (Mail/Fax)2. Email3. Post to insurer website4. ACORD Data Standard Notification (AL3/XML)Preferred method=4==============================Renewal Quote OfferAL3 2TRG25 Cycle Business Purpose CodeRWQ = Renewal Quote==============================If a second renewal quote is offered, it also is sent with 2TRG25 code RWQ.NOTE: If the additional offer is for Flood, there is agreement because of time requirements unique toflood that an electronic transaction is not necessary (do not send a second renewal offer for flood).=================================AL3 2TRG25 Cycle Business Purpose Code = XQU (Cancellation Of Pending Quote) The 2TRG33Transaction Effective Date would be the 5BPI37 Policy Effective Date to mimic a flat cancellation onrenewal.DownloadSupported?YesInsurer downloads ACORDtransaction that makes clearthe status of the policy(expiration, renewal, etc).Agency customer/policymanagement system© 2001 – 2009 ACORD CORPORATION – ALL RIGHTS RESERVEDACORD PCS RENEWAL PROCESSING WORKFLOW VERSION 1.020

5.1.5 Renewals – Automatic - Additional Business Requirements5.1.5.1 Complete PathRenewals-Automatic-Additional Business RequirementsPreferred Path = Green ShadeRenewal TermAutomatically Generated # Days in advance of current term expiration, includingrequest for required signature.(# = count of days – varies based on policy type and/or regulatory requirements)Ed. Date: August 6, 2009© ACORD 2009Renewal Requirement Presentedto policyholderYesDoes insurer haverequirements of thepolicyholder beforeproceeding withrenewal?Examples ofrequirements:student gradesAppraisalsPhysicalWet signatureEtc.Did policyholdermeetrequirements?YesRenewal IssuedNoExamples include: Driverexclusion signature,signature on affadavit forE&S, terrorism exclusionsignatureNoIf applicable,Insurer adjustsrenewal per lackof requirementsbeing metDoes Insurer have postrenewalbusinessrequirements of policyholderYesDid policyholdermeetrequirements?NoCarrier revises accordingly.Does InsurerProceed withRenewal?NoYesNoYesThis will usually result in theissuance of a revised renewal or apolicy cancellation/intent tononrenew.E.g. revise renewal removingdiscount, issues cancellation noticedue to lack of significant document/signature, etc.Renewal NotIssuedRoutine renewalprocessing ensuesE.g. billing,payment, etc.YesIs renewalaccepted?NoCancel PolicyWhen the customer does not want therenewal, he/she requests flatcancellation or the policy will eventuallycancel for nonpaymentNoDownloadSupported?YesManage PaperInsurer downloads ACORDtransaction that makes clearthe status of the policy(expiration, renewal, etc).Agency customer/policymanagement system© 2001 – 2009 ACORD CORPORATION – ALL RIGHTS RESERVEDACORD PCS RENEWAL PROCESSING WORKFLOW VERSION 1.021

5.1.5.1 Preferred PathPreferred Path = Green ShadeRenewals-Automatic-Additional Business RequirementsRenewal TermAutomatically Generated # Days in advance of current term expiration, includingrequest for required signature.(# = count of days – varies based on policy type and/or regulatory requirements)Ed. Date: August 6, 2009© ACORD 2009Renewal Requirement Presentedto policyholderYesDoes insurer haverequirements of thepolicyholder beforeproceeding withrenewal?Examples ofrequirements:student gradesAppraisalsPhysicalWet signatureEtc.Did policyholdermeetrequirements?YesRenewal IssuedNoExamples include: Driverexclusion signature,signature on affadavit forE&S, terrorism exclusionsignatureDoes Insurer have postrenewalbusinessrequirements of policyholderYesDid policyholdermeetrequirements?NoCarrier revises accordingly.NoYesThis will usually result in theissuance of a revised renewal or apolicy cancellation/intent tononrenew.E.g. revise renewal removingdiscount, issues cancellation noticedue to lack of significant document/signature, etc.Routine renewalprocessing ensuesE.g. billing,payment, etc.YesIs renewalaccepted?NoCancel PolicyWhen the customer does not want therenewal, he/she requests flatcancellation or the policy will eventuallycancel for nonpaymentDownloadSupported?YesInsurer downloads ACORDtransaction that makes clearthe status of the policy(expiration, renewal, etc).Agency customer/policymanagement system© 2001 – 2009 ACORD CORPORATION – ALL RIGHTS RESERVEDACORD PCS RENEWAL PROCESSING WORKFLOW VERSION 1.022

5.1.6 Agency Use Of MGA/Wholesaler Renewal Process5.1.6.1 Complete PathAgency use of MGA/Wholesaler renewal processEd. Date: May 07, 2009© ACORD 2009In this scenario, in some cases you will get a renewal quote from the MGA, in other cases, it must be requested. For thecarrier to MGA portion, refer to Renewal – NonAutomatic diagram.Preferred Path = Green ShadeMGA sends renewal offer #1 to agent, usually sent X days in advance ofrenewalResponsereceived?YESIs offer Accepted?YESOffer Presented to client foradditional information or signedapplication, additionalunderrwrtiing information (newappraisal, MVR, etc.)In some cases, payment isrequested at this point. Ifthe premium is to befinanced, arrangementsare made at this point.NONOInformation returned to AgentMGA notified of non acceptanceMGA sends additional offer?If policy is renewed elsewhere orlapsed by agency , follow the properagency workflow.Information sent to MGA to bindcoverageMGA sends Binder to AgentAgent Sends Binder(s) to Clientpending receipt of policyIn some cases, payment isrequested at this point. Ifthe premium is to befinanced, arrangementsare made at this point.Renewal Issued and sent to AgentRequest to MGA to cancel policyNoPaymentReceived?YESPolicy sent to clientNoDownloadSupported?YESManage PaperInsurer downloads ACORDtransaction that makes clearthe status of the policy(expiration, renewal,cancellation, etc).Agency customer/policymanagement system© 2001 – 2009 ACORD CORPORATION – ALL RIGHTS RESERVEDACORD PCS RENEWAL PROCESSING WORKFLOW VERSION 1.023

5.1.6.1 Preferred PathAgency use of MGA/Wholesaler renewal processIn this scenario, in some cases you will get a renewal quote from the GA, in other cases, it must be requested. For thecarrier to GA portion, refer to Renewal – NonAutomatic diagram.Ed. Date: August 6, 2009© ACORD 2009Preferred Path = Green ShadeGA sends renewal offer #1 to RA, usually sent X days in advance ofrenewalPayment is requested atthis point. If the premiumis to be financed,arrangements are made atthis point.Responsereceived?YESDoes RA want topresent to Client?YESOffer Presented to client foradditional information or signedapplication, additionalunderrwrtiing information (newappraisal, MVR, etc.)NONOInformation returned to RAGA notified of non acceptanceGA sends additional offer?If policy is renewed elsewhere orlapsed by agency , follow the properRA workflow.Information sent to GA to bindcoverageGA sends Binder to RARA Sends Binder(s) to Clientpending receipt of policyRenewal Issued and sent to RAPolicy sent to clientDownloadSupported?YESInsurer downloads ACORDtransaction that makes clearthe status of the policy(expiration, renewal,cancellation, etc).Agency customer/policymanagement system© 2001 – 2009 ACORD CORPORATION – ALL RIGHTS RESERVEDACORD PCS RENEWAL PROCESSING WORKFLOW VERSION 1.024

6 AL3 STRUCTURE6.1 AL3 Details6.1.1 2TRG Transaction Header GroupThe Transaction Header Group is a Control Group (as described in ACORD Standard No. 900). It isalways the first element group of any transaction.The Transaction Header Group contains data elements which permit the receiver of the transaction toroute the transaction to the proper internal system(s), to understand the nature of the transaction tothe degree necessary to process it through those systems and to respond in an appropriate mannerto the sender of the transaction.6.1.2 2TRG25: Cycle/Business PurposeThe Cycle/Business Purpose data element is a three-character code that is used to indicate thepurpose for which the Transaction Processing Cycle has been initiated. The code remains the samefor all transactions within a given cycle. Often, the initial transaction of the Processing Cycle will havethe same Cycle/Business Purpose code as the Transaction Function code for that initial transaction.For example, the Transaction Function code might be 'NBS' or New Business and the Cycle/BusinessPurpose code might be the same.However, it is also possible that the initial transaction of a Processing Cycle could be responding to atransaction from a prior cycle. For example, the initial transaction of a given Processing Cycle mightcarry a Transaction Function code of DEC indicating that policy Declaration pages are beingtransmitted. In this case, the Cycle/Business Purpose code might again be 'NBS' indicating that theDeclaration pages relate to a prior New Business Declaration transaction.AL3CodeValueAL3 Code DescriptionAL3 CodeEffective DateCycle/Business Purpose Codes List 2/1/1984ACR Account Current Reconciliation 2/1/1984APV Surety Bond Approval 9/1/1997ARR Anniversary Re-Rating 2/1/1984BDC Bond Closed 10/1/2000BND Binder 2/1/1984BOR Broker/Agent of Record Change 4/1/2004BRQ Surety Bond Request 9/1/1997BRS Surety Bid Bond Results 9/1/1997CER Certificate of Insurance 4/1/2004CLI Claim Information 2/1/1984COM Direct Bill Commission Detail 2/1/1984CON Contact 2/1/1984CSQ Claims Inquiry 2/1/1984AL3 CodeExpiration Date© 2001 – 2009 ACORD CORPORATION – ALL RIGHTS RESERVEDACORD PCS RENEWAL PROCESSING WORKFLOW VERSION 1.025

AL3CodeValueAL3 Code DescriptionAL3 CodeEffective DateAL3 CodeExpiration DateDBR Direct Bill Reconciliation 2/1/1984DBS Direct Bill Status 2/1/1998DIV Dividend Transaction 10/1/2000DSP Download Setup Transaction 2/1/1984EPI Evidence of Property Insurance 4/1/2004ERR Error Messages 2/1/1984IID Insurance ID Card 4/1/2004LNT Loss Notice 2/1/1984MEM Electronic Memo(s) 2/1/1984NBQ New Business Quote 2/1/1984NBS New Business 2/1/1984NRA Non renewal notification to agency 2/1/1984PAB Premium Audit 2/1/1984PCH Policy Change 2/1/1984PCQ Policy Change Quote 2/1/1984PMT Payment 2/1/1984PNQ Policy Inquiry 2/1/1984POL Policy (un-specified). To be used when the Cycle/ 2/1/1984Business Purpose is not available but the TransactionCategory is Pb (Policy).PRT Miscellaneous Print 2/1/1984REI Reinstatement 2/1/1984REV Assignment Reversal 2/1/1984REW Rewrite 2/1/1984RIX Re-Issue 2/1/1984RNR Reversal of Non-Renewal 2/1/1984RRQ Renewal Re-Quote 2/1/1984RWL Renewal Image 2/1/1984RWQ Renewal Quote 2/1/1984RWR Renewal Request 2/1/1984RWX Non-Renewal (Sent To Policyholder/Copy Agency) 2/1/1984SNL Statement of No Loss 4/1/2004SOV Statement of Values 4/1/2004SYN Data Base Synchronization. 2/1/1984SYR Database Synchronization Request 2/1/1984XLC Cancel/DNR Transaction Structure 2/1/1984 2/1/1999XLC Cancellation Confirmation 2/1/1999XLN Cancellation Request 2/1/1984XQU Cancellation of Pending Quote 5/9/2008© 2001 – 2009 ACORD CORPORATION – ALL RIGHTS RESERVEDACORD PCS RENEWAL PROCESSING WORKFLOW VERSION 1.026

7 INDEX AND GLOSSARY7.1 IndexACORD Standard or Standard: Refers to the applicable ACORD Life, P&C/Surety or ReinsuranceStandards. These are the official specifications.ACORD Standards Program or Program: Refers to the ACORD Standards Operating Procedures,Guidelines and Polices used by ACORD in the governance of a particular Standard. These rulesgovern how the Standards are developed and managed.7.2 Glossary7.2.1 RenewalAn insurance policy renewal is the reinstatement or continuation of a contract that is about to expire.Unless cancelled, the renewal term is an active replacement term for the current term that is expiring.The most common example of a renewal involves personal automobile policies as the insurer typicallycreates the renewal as required by state law (30 days, 45 days, etc.) in advance of the expiration ofthe current term. The bill for the renewal often accompanies the renewal. If the renewal bill is not paid,the insurer will issue a notice of cancellation for non-payment that must provide a minimum count ofdays notice (often determined by state law) to the policyholder and coverage continues into the newterm until the cancellation date for non-payment.7.2.2 Renewal QuoteA renewal quote is a renewal offer for quote purposes only. This is not a renewal because it does notprovide coverage in the event of a loss.7.2.3 Automatic RenewalsAn automatic renewal is system generated. Meaning, without manual intervention or a formal request,a policy renewal is automatically generated as the policy is nearing the end of its current term. Thecount of days in advance of the current term expiration at which the renewal is generated may varybased on regulatory requirements; though a common minimum count is 30 days.In traditional processing, when the renewal is generated, two sets of renewal declarations pages aregenerated (one for the policyholder and the other for the agency). Some insurers have “turned-off” thedelivery of the declarations pages to their agencies in favor of electronic handling (e.g. ACORDstandard data exchange and/or ability to pull electronic declaration page from insurer website).Generation of the policy renewal declarations pages also automatically triggers the related billingactivity for payment of the renewal term.7.2.4 Non-Automatic RenewalsA non-automatic renewal is where a renewal quote is requested by the agent, but the policy does notautomatically renew. If the payment is not received at the expiration date the policy lapses. Uponreceipt of the payment the policy will be issued using that effective date vs. the expiration date of thepolicy. In some cases the renewal can be issued without a lapse provided the insured sends a letterstating they have no known losses.© 2001 – 2009 ACORD CORPORATION – ALL RIGHTS RESERVEDACORD PCS RENEWAL PROCESSING WORKFLOW VERSION 1.027

In traditional processing, when the renewal is generated, two sets of renewal declarations pages aregenerated (one for the policyholder and the other for the agency). Some insurers have “turned-off” thedelivery of the declarations pages to their agencies in favor of electronic handling (e.g. ACORDstandard data exchange and/or ability to pull electronic declaration page from insurer website.)7.2.5 Audit (often occurs at renewal)An Audit is an endorsement to the policy term that compares actual exposure (e.g. payroll, sales etc.)to originally estimated exposure and adjusts premium accordingly.© 2001 – 2009 ACORD CORPORATION – ALL RIGHTS RESERVEDACORD PCS RENEWAL PROCESSING WORKFLOW VERSION 1.028

8 REVISION HISTORY/CHANGE SUMMARYVersion Date Description of Change1.0 01-Dec-2009 Original Publication© 2001 – 2009 ACORD CORPORATION – ALL RIGHTS RESERVEDACORD PCS RENEWAL PROCESSING WORKFLOW VERSION 1.029