CAIB - Chapter 2 Flashcards
What is a submission and identify three types of information which might be included on it.
A submission is a proposal for insurance presented to the underwriters consideration. It includes an application, additional written information, additional verbal information.
Purpose served by a survey form
It helps to identify loss exposures
it helps to eliminate any coverage not needed
it helps in the development of underwriting information needed by the Insurer.
checklist
reduces the potential of errors and omissions
ensures that no coverage is being forgotten
alerts the broker of possible loss exposures
why is the distance or detachment from other commercial risk an important rating consideration for Insurers?
It is important to know because the closer a building is to other commercial risks the higher their exposure to loss
Risk classification
Is the act of classifying the risk according to its potential for loss
individual risk underwriting
considers individual submission on their own merits, regardless of the class the risk belongs to.
Physical hazard
A condition relating to the use of tangible property which may cause a peril to occur. Occupancy, housekeeping are examples
Moral hazard
A condition related to the characteristics of the applicant that might cause a peril to occur. Example would be questionable business practices
Morale hazard
It relates to the attitude of the applicant. Indifference to loss would be an example.
accommodation business
This is when the Insurer has a good relationship with the broker and agrees to provide coverage for a substandard risk as a favor to the broker.
Arguments to convince an underwriter to accommodate a coverage request
The broker will increase the changes of a substandard business risk being accepted when the brokerage has:
low loss ratio
sufficient premium volume
good mix of business
long period of service to Insurer
