IF3.8 Underwriting Considerations Flashcards
Purpose of underwriting
The understand the risks being proposed to decide whether or not the accept a risk
Is commercial or personal insurance simpler to underwrite
personal, more homogenous
Consumer Insurance (Disclosure and representations) Act 2012
The consumer must only answer, fully and accurately questions that the insurer asks of them.
Insurance act 2015
Commercial customers must give a fair presentation of risk.
What will the underwriting process assess?
- frequency and severity of possible claims (specifically looking at that class of business)
- The average claim per member of the group
- The proposers characteristics in comparison with the average member.
Factors used in the motor insurance underwriting process
- drivers age
- Type and make of the car
- type of use
- geographical area
- storage
- driving record
- cover required and/or extensions requested
- vehicle modification
Factors used in the health insurance underwriting process
- occupation (some jobs have increased risks which could effect the health)
- age
- family circumstances
- lifestyle and physical condition
- medical history (pre-existing conditions)
why may insurers limit the benefit of a health insurance policy
as to not entice people who are in financial difficulty to enter into an insurance contract and then break their arm to get a pay-out, for example
What may an insurer do in a proposer has a pre-existing condition
make them complete a medical exam to fully understand the risk.
What underwriting considerations are there for the buildings in household insurance?
- construction (standard materials: brick stone or concrete with a roof of slates, tiles, metal or concrete).
- location (is the location more at risk of storms, floods, subsidence, crime & arson)
What underwriting considerations are there for the contents in household insurance?
- Area (theft risks)
- Occupation during the day
- Security
What underwriting considerations are there for travel insurance?
- Destination (Countries such as the US has expensive healthcare)
- Purpose and duration of travel
- Group policies (a group is likely to all be involved in the same accident/ situation)
- Existence of pre-existing conditions.
What underwriting considerations are there for fire and special perils insurance?
- Use of building
- Types of goods stored on premises
- Construction and material (Brick, steel or timber)
- Safety feature
- Risk management features (management, control of contractors)
- number of floors and area
- method of heating and lighting
- location relative to perils (e.g. storm, flood, subsidence, theft and arson)
What underwriting considerations are there for theft insurance?
- Trade (some trades such as jewellers are more susceptible to theft than others)
- geographical area
- any moral hazard of owner
- nature and construction of the property (resistance to forced entry)
- Theft precautions (e.g. CCTV, security lighting, security guards & intruder alarms)
What underwriting considerations are there for glass insurance?
- use of the building
- geographical area (likely to have vandalism)
What underwriting considerations are there for money insurance?
- how the money is handled
- precautions when storing or transporting money
- how employees are paid
- how clients pay (card is safer than cash)
What underwriting considerations are there for legal expenses insurance?
proposers susceptibility to actions through the courts (employment criteria, views on H&S regulations and occupation)
What underwriting considerations are there for business interuption insurance?
how quickly the business can get up and running again:
- can they operate from another premises
- are there replacement machines available
- Is there any critical dependencies
- are there any seasonal features (dependent on key times of year, damage at these times may have result on business)
- external dependencies s.a. suppliers, customers and utilities.
also assess similar risks to the property underwriter
What underwriting considerations are there for employers liability insurance?
- wage roll
- number of employees
- trade and occupation, danger to the staff