Study 8 - Underwriting Relationships

Question 1

What is one of the most important benefits of good relationships as an underwriter?

Answer 1

Access to information

Question 2

What professionals should underwriters establish relationships with?

Answer 2

• Other underwriters
• Reinsurers
• Brokers
• Agents
• Risk managers
• Claims department
• Actuarial department
• Loss control department
• Legal department

Question 3

What information may underwrites seek from other underwriters?

Answer 3

• The operations of the risk in those territories
• The law in those jurisdictions
• Environmental considerations
• Business climate, or any other feature of the risk and its local circumstances that might be relevant to an underwriter’s assessment of the risk

Question 4

What are some risks where an underwriter may need to reach out to a reinsurer?

Answer 4

• Hazardous occupancies such as chemical manufacturing
• Risks located in areas unprotected by municipal water supplies or fire departments
• Risks with the potential to suffer catastrophic loss
• Risks that sell their products in the United States
• Liability risks with the potential for “long-tail” liability losses
• Risks with high values

Question 5

How would an underwriter establish underwriting credit?

Answer 5

Share a mix of risks with facultative reinsurers, including more and less attractive risks

Question 6

Define risk management

Answer 6

Analyzing a risk to quantify the potential for losses in a specific investment and to decide what is the appropriate action to take (or whether to not take action)

Question 7

Define loss reserve

Answer 7

An amount carried as a liability in an insurer’s balance sheet representing, in respect of each claim, an amount equal to the estimated final settlement cost less any amounts already paid

Question 8

Define warranty

Answer 8

Statement or stipulation or promise in an insurance contract, the breach of which may nullify the contract

Question 9

A lawyer could help the underwriter “take the temperature of the court”, meaning what?

Answer 9

Understand how policy language has been and would be interpreted by the court in the event of a dispute

Question 10

List some organizations that underwriters may benefit from

Answer 10

ULC (Underwriters Laboratories of Canada)
IBC (Insurance Bureau of Canada)
SCM Risk Management
IIC (Insurance Institute of Canada)
Trusted social media platforms
SMEs (Subject Matter Experts)

Question 11

What is a benefit of good relations between the underwriter and the claims department?

Answer 11

Learning of changes in legal jurisdiction of newly released judgments that will affect the future assessment of risks

Question 12

What is risk management?

Answer 12

Analyzing a risk to quantify the potential for losses in a specific investment to decide on the appropriate action to take (or whether to not take action)

Question 13

Which organization tests products for safety?

Answer 13

ULC

Question 14

What are the benefits of an underwriter establishing good relationships with other insurance
professionals?

Answer 14

• The dissemination of information they make possible
• Make underwriters’ jobs easier by giving them access to information that can be valuable or even necessary to properly underwrite
• Help give underwriters perspective by understanding the roles of other insurance professionals, which can help them proactively prepare for a conversation
• Help build trust between underwriters and the insurance professionals they deal with
• Trust leads to attracting and retaining profitable business

Question 15

List the reasons why it is beneficial for the underwriter to have a strong bond with other underwriters.

Answer 15

• Relationships with fellow underwriters are invaluable, especially when they need to consult each other about types of risk they may not be as experienced or familiar with
• Having a pool of professionals from which to draw for advice is important
• Regarding large commercial accounts, some will have operations in different parts of the country or even internationally; on such accounts, underwriters may find it useful or necessary to call upon the expertise of their counterparts in other branches
• Underwriters with regional or territorial responsibilities need to cultivate good working
relationships with their counterparts in other regions
• They might seek information about
o the operations of the risk in those other territories
o the law in those jurisdictions
o environmental considerations
o the business climate, or any other feature of the risk and its local circumstances that might be relevant to an underwriter’s assessment of the risk

Question 16

Describe the industry organizations that benefit underwriters in their work and education.

Answer 16

• ULC: An underwriter might well benefit from being able to attend the next time ULC were to test, for example, a pellet stove. Such tests and the opportunity to talk to the people administering and evaluating them are excellent opportunities for an underwriter to
acquire technical knowledge

• IBC: An organization engaged in, among other things, working with the federal, provincial, and territorial governments on the legislative framework within which property and casualty insurance is practised.
• SCM Risk Management Services: A familiarity with SCM’s services and personal contact with SCM staff can offer an underwriter access to a repository of information about risks, ratemaking, and loss prevention.
• IIC: Premier source of professional education and career development for the country’s property and casualty insurance industry.

• Trusted social media platforms can also serve as a valuable source of information for underwriters. Individuals, organizations, and subject matter experts (SMEs) who seek to be relevant and on the cutting edge of their industry will seek out, compose, or share
information that their followers may find interesting and potentially useful. Using this information can help an underwriter be aware of trending topics and access new information in real time. As is the case with all online media, it is prudent to ensure that the information is credible before trusting it as fact or using it as a basis to inform decision making.