Level C Flashcards
What is the motor market strategy?
Our strategy is to sustain the profitability of the account
through the market cycle by continuing the strong
underwriting and portfolio management disciplines in
accordancewith our segmentation policy, risk quality
and pricing strength, whilst capitalising on opportunities
to grow our core business.
What are the good habits - Which have enabled Alllianz to build a profitable commerical motor portolio?
- Careful and sensible risk segmentation and selection,
targeting risk averse clients and low hazard classes; - Pricing to target loss ratios and comparing characteristics
to account average benchmarks for the risk type; - Achieving target rate change and technical pricing in line
with Plan objectives; - Applying minimum rates per vehicle to achieve adequate
large loss provision; - Constantly monitoring and managing portfolio
performance and the effects of the pricing strategy; - Predicting and managing future performance around
a set of meaningful and measurable Key Performance
Indicators; - The use of account data and characteristics of
homogenous exposuresto underwrite and price
business, not just ‘burning cost’; - Working with and developing a team of Senior
Underwriters in head office and the trading regions to
run the business; - Specialist training, complimented by the delegation of
appropriate authorityto the underwriters; - Confidence! Holding our nerve and constantly testing
the market for scope toexceed our corporate plan
objectives.
What is the percieved benefit of Core risks?
And why does it comperise a higher % of our account?
Core risks have a lower perceived large loss potential
per unit of exposure.
We can therefore regard its performance as more stable and predictable.
Consequently, we believe that core business is more
likely to deliver a sustained profitable result for
us, provided our pricing is sufficient to account for
attritional costs and there is adequate allowance for
large loss across the account.
Why do we write non-core business?
- We are a major player in the Commercial Motor
Fleet market and this can enable us to use our
influence on this market to develop our overall
commercial business. Writing a broad base of
business will enable us to do this. - The ability to accommodate non-core business can
provide leverage to obtain core business or nonmotor business. - We have a historical book of non-core business,
which provides a contribution to our account and
helps to fund our expenses.
What constitutes a normal risk?
1) has been established for at least three years, and an
up-to-date confirmed experience from the previous
Insurer(s) has been obtained. Proof of NCD for No
claims discount rated risks must be obtained, plus
details of all claims over the past three years.
2) has not expanded rapidly by organic growth or takeover
3) has not changed Insurer each year.
4) has not got a high proportion of young drivers
(under 25 years of age) or drivers with an accident or
conviction history.
Drivers with a poor accident records may indicate a
careless attitude, inadequate training to drive the
vehicle(s) involved, or disinterest in the job that they
are doing.
Drivers with a poor record of motoring convictions
are likely to be less attractive risks.
None of these are favourable features, so risks
displaying them should be generally avoided.
5) Is not listed below under “Risks that require special
consideration” or “Risks that are not normally
acceptable”.
The information provided within the Broker
presentation should indicate the Insured’s trade or
occupation.
Why are Carriage of goods for hire and reward a risk which requires special consideration?
These risks are usually unattractive
to us as they are often associated with high
accident frequency on account of high utilisation
and the pressures of tight timed deliveries in urban
locations. Driver turnover may also be high limiting
the benefit of driver training. If the vehicles used are
less than 7.5 tonnes there may be a bias towards
drivers without HGV driving licence entitlement.
Risk exposure - what should be thought, when the schedule changes to one with a high % of high grouped/high value vehicles?
We may be
basing our terms on a claims experience which relates to lower grouped vehicles which will be inadequate to reflect the current and future exposure
Risk exposures - what should be thought about when newer vehicles are added onto the schedule
While these newer vehicles might have a better risk safety features such as breaking sensors/motorway lane sensors.
but they will have an impact on the costs
associated with repairing a vehicle. This is due to an
increase in the cost of parts for the vehicle but also an
increased cost of labour as motor mechanics become
much more specialist in different areas of technology. The
increase in AD and TPPD costs due to the enhancements
should be considered when we review a vehicle schedule
which consists of newer vehicles that have these features
What are some questions we can ask, to get a good understanding of the driver profile?
- Is there a driver training programme in place?
- Does the client undertake driving licence checks? If so, how often?
- What is their recruitment policy with regards drivers
with convictions? - Do they have any young drivers within their driver
profile? If so, we should look to ascertain how many there are, whether they work for the business and whether they have had any claims or convictions.
What are the questions that we must ask, when dealing with a company that has seen quick expansion?
- What is the reason behind the growth?
- If this is organic growth then we should seek
clarification on who the new drivers are and whether there is a change in the driver profile? Have the new drivers got the relevant experience? - If this has been by acquisition or as a result of a merger, where have the vehicles been insured
previously? Do they have their own policy? Can we
obtain a claims experience? - What is the nature of the new company’s occupation?
- Is there a change in risk type of exposure which drives a different rating tactic?
- If there are any changes to the risk or claims
experience, we should take this into account when we
calculate our terms. - In either of the above circumstances, we need to
understand whether the growth is set to continue and
whether risk management controls are being
Why does risk managerment form an important part of the risk selection process
because a willingness to undertake risk management
usually indicates a commitment to work with the Insurer
to improve the claims experience and contain losses.
What are some other risk quality indicators?
- Fleet Evaluation Form (ref: ACOM107)
- Non-Motor Business
- Client Profile
- Internet search/Trade Magazines/Advertisements/ Linkedin
- Financial Health Referencing (FHR Checks)
- Other Measures
Why are credit checks and Financial health referencing important to Allianz?
1 Businesses which are experiencing financial difficulties
are more likely to:
* Produce fraudulent claims such as arson, theft or
seek inflated/exaggerated settlements;
* Pay less attention to critical matters such as vehicle
maintenance, employment and retention of quality
drivers and risk management;
* Increased vehicle utilisation and driving time for
individuals will increase the exposure hazard.
2 A history of failed companies attaching to an individual
partner or director is an enhanced risk because such risks
are more likely to have fraudulent losses or arson claims.
3 Our competitors undertake Financial Health
Referencing and we may therefore acquire risks
rejected by them if we do not carry out these checks.
4 We should also bear in mind that if problems are
encountered in collecting the premium in the early
life of the policy we may be unable to recover even a
modest claims spend
Why is the CCE important, and what would you expect it to typically contain?
The claims experience is one of the most important parts
of a Commercial Motor enquiry, as it will provide us with
the information to assess whether a risk is better, or worse
than our account average.
It will typically contain the following:
* Name of the holding Insurer (and previous Insurers in
the past three years, if known);
- Policy cover for the periods of insurance specified;
- Renewal date to which the experience applies;
- Vehicle years;
- Number of claims reported;
- Accidental damage and third party costs split between
amounts paid and outstanding for each insurance
period over which the experience is compiled.
Why is a claims experiance of one year, of limit value?
as it provides information only on the accident frequency, average
claims cost and loss ratio for that year. If the business has only been operating for one year then this limited information is usually insufficient to help us to make a reasoned judgement on the case.
