Policy administration is the day-to-day servicing of insurance contracts by an insurer or by an administrator acting for it. It begins when a risk has been accepted through insurance underwriting and covers issuing the policy documents, setting up the record, collecting premiums, and processing changes during the term, known as endorsements, such as a new address, vehicle or beneficiary. It also includes renewals, cancellations, lapses and reinstatements and, for life business, surrenders, loans and maturity payments.
The work is carried out on a policy administration system, which holds the master record of each contract and feeds billing, claims administration, reinsurance, finance and regulatory reporting. Controls focus on data accuracy, timely issue of documents, correct premium calculation and fair treatment of customers at renewal. Many insurers run several ageing systems inherited from past products, and migrating to modern platforms is a major cost. Quality of administration influences the persistency ratio.