CHAPTER 9: Underwriters Flashcards
In simple terms, what is the role of an underwriter?
An underwriter is the one that makes the decision on behalf of an insurer whether to accept a presented risk.
Why are they called an underwriter?
Historically an underwriter would sign their name underneath a risk to accept it.
What are the main functions of an underwriter?
- Assess the risks presented to the pool
- Decide whether or not to accept the risk (or how much of it)
- Determine the terms and conditions to offer
- Calculate an appropriate premium
What are the reasons as to why an underwriter would only take a proportion of a risk?
- The size of the risk and the underwriters authority
- Balancing the portfolio (not too much risk in one area)
- Brokers input, wanting a risk to be shared
- New class of business for the insurer
What is the lead underwriters role?
- To review the risk presentation being made by the broker
- Consider whether to accept the risk
- Decide the terms and conditions on which to accept
- Quote a premium
If a leader quotes a risk and one of the following underwriters will take the risk but for more premium, what happens and why?
The leaders and other insurers that accepted will still only get the quoted premium, this is because of ‘Competition Law’.
What did the European Federation of Insurance Intermediaries put out in regards of subscription markets?
High level principles concerning the placement of business in a subscription market.
