Chapter 7 - Program and Product Development Flashcards
Why write Program Business?
UW guidelines can be unique to a program proportional Generation of large premium base Services and Coverage can be tailored Separately May cost less to administer
*** The main advantage is large homogenious group of participants with similar exposures that are identifiable, with easy solutions for mitigation and avoidance of losses
How to Identify Candidates for Program Business
Those groups that are broad enough to attract good business
You must be able to attract sufficient premium with the right mix of business
The members must have similar exposures to ensure the losses are more quantifiable and the spread of risk will be higher
What is difference of Group Vs Program
Members can select from a range of coverages whereas Program business members take a list of prescribed coverage
How to develop a program?
Capture Data to address program. Do you have similar business on the books based on LOB, region etc
Market Intelligence can provide the following
Premium Base Loss estimates # of risks and where located Exposures of the members Who/what is the competition Estimate how much business can be secured by the producers
What is an associated Sponsor program
Member must meet educational/technical, or financial requirements, to qualify.
It usualluy means a better quality member which should have better results
3 Analysis must be completed to have better chance of success
Profitability, Coverage, and Cost/Benefit
What are main points of profitability Analysis
Gather data for rating purposes to see that we can make a profit
Seek out advice from reinsurers
Need to determine what is acceptable loss ratio and acquisition costs
What are the main points for Coverage Analysis
Does it conform to regulatory controls
Will you have to include special coverages that are not normally offered
what are the minimum limits
what is the impact of coverage to reinsurance
What are the main points for cost benefit analysis
staffing
management of the program
What are main points for Planning and Strategy of Program
How will it impact other business already on the books
Are there any unique issues attached to writing this program.
Entrance and Exit Strategy of Program business
how long is this program going to be distributed
when will it be distributed
may have to give plently of notice to the producers
insurer is still responsible for handling existing business on the books until they expire IF exit
check cancellation clause
business plan of program
perform SWOT analysis
Eligibility criteria for program
who fits into the program
can members be accredited?
depending on how program can be run ex; regional or national will impact membership
Two methods of underwriting - internal vs external
Decision depends on resources, expertise and location
Monitoring and audit control are essential to preserve integrity of program
if MGA is involved, they will want control in their own office
