Chapter 6 Flashcards
Rating for Small and Large Goods Vehicles
- small goods follow motor car ratings
- medium/large vehicles rated by gross vehicle rate
Commercial Vehicle Underwriting Factors
name & address - VAT status, registered number, business address
occupation or business - affects vehicle use and cargo risks, (flammable, toxic)
use classification - own goods, haulage, limited mileage
drivers - age, experience and driving records
vehicles - categorised by plated weight
Special Types
Refers to vehicles of special construction that do not fall under standard vehicle categories
Goods Shops
- breakdown vehicles
- concrete mixers
- cranes
- dump trucks
- ice cream vans
Special Type Vehicle Groups
Group 1 - use is similar to other vehicles in terms of mobility
Group 2 - use is limited to a specific location and operate at low speed
Group 3 - steam traction engines
Group 4 - trolleys not constructed for general road use
Agricultural Vehicles
Vehicles used by farmers, market gardeners, smallholders or hired to local authorities
Examples : tractors, threshing machines, harvesters, grass driers
Agricultural Vehicles Area of Use
Low-risk: rural locations, little traffic, low claims
High-risk: timer haulage on roads may increase premiums
Agricultural Public Hire Vehicles
Exposure is higher due to frequent use in high-traffic areas
Rates vary based on cover, district, car group and limitations
Self-Drive Hire Vehicles Rating Methods
Turnover basis - large operators with high vehicle volume
Flat rate per vehicle - for small operators with fewer vehicles
Day-by-day rates - for occasional hire businesses
Driving Instructor Vehicles
Must be on the register of Approved Driving Instructors (ADI)
Buses, Coaches and Minibuses Radius of Use
- long distance journeys are treated differently than local, regular contracts
- coaches for professional sports clubs present high passenger risks
Coaches and Minibuses Risks
- risk is higher for vehicles with more than 17 seats
- passenger risk depends on the nature of the organisation and risk management
- large coaches can cost over £200,000 to replace
- coaches carrying sports supporters are vulnerable to targeted vandalism
Motor Trade - Named Driver Basis
- suited for small businesses with a limited number of drivers
- cover applies only to named drivers
Motor Trade - Trade Plate Basis
- issued to move unlicensed vehicles for defined business purposes in the UK
- exempt from registration and road tax
Motor Trade - Points Rating
- common for medium to large businesses
- points are allocated for the number of drivers, vehicles and trade plates
Fleet-Rated Risks & Premium Calculation
- consists of large groups of vehicles owned by an organisation
- premiums assessed based on the claims experience of the fleet
- premium calculations consider vehicle types, claims frequency, claims costs and risk factors
Fleet Risk Management
- monitoring claims frequency, driver training and vehicle maintenance
- security systems, blind spot lenses, driver training and use of telematics can improve risk management
Contingent Liability
- covers the risk when employees use their own vehicles for business
- rating is typically per employee and is based on the number of employees
- premium generally not affected by NCD
Occasional Business Use
- covers employees who use their own vehicles occasionally for business purposes
- it’s a primary cover which indemnifies both the policyholder and the employee
- rating is based per employee and on the type of cover
Commercial Breakdown Insurance
- pricing varies depending on how it is marketed
- considers factors such as vehicle age, type, mileage and driver age
Treaty Reinsurance
- automatic, obligatory reinsurance covering all risks within a defined scope
- must cede all risks within the treaty’s scope
Proportional Reinsurance
- insurers retain a portion of the insurance, ceding the balance to the reinsurer
- quota share arrangement is common, where premiums and losses are shared proportionally
Excess of Loss Reinsurance
- reinsurer only becomes liable when a loss exceeds the ceding insurer’s retention
- retention amounts vary based on the size and type of the insurer’s portfolio
Stop Loss Reinsurance
- covers losses when the ceding insurer’s annual loss ratio exceeds an agreed percentage
General Practised for Mid-Term Changes
- risk is reassessed
- premiums or terms are adjusted
Handling Unacceptable Risks
Policies may be cancelled if the risk exceeds acceptance limits
Foreign Use of Motor Insurance
Policies may need extensions for wider cover beyond the UK and EU minimums, with special consideration for travel to Non-EU countries
Constructive Total Loss
When repair costs exceed a vehicle’s market value, insurers may allow the policyholder to retain the vehicle with reduced settlement
Balanced Decision-Making at Renewal Underwriting
Avoids adverse risks or the loss of profitable business and ensures premiums are accurately adjusted
Claims History Review
Review details claims data like verified documents such as police reports, to assess risk and decide if special terms are necessary
Flagged Risks
Repeated small claims
External Sources Underwriters use
- CUE
- MyLicense
- MOT certificates
Special Terms Review
Underwriters may remove terms like high excesses or restricted cover after claim-free periods
Conviction-Related Terms
When convictions become “spent” under the Rehabilitation of Offenders Act, they can be removed from the policy
Underwriting and Claims Liaison
Ensures accurate policy interpretation, informed decision-making and overall operational success
