Study 9: The Underwriting Environment Flashcards
1
Q
Centralized Insurers
A
- Bulk of the underwriting authority in the head office or for managers
- Very detailed and structured line guides
- Much less discretion when accepting risks or setting terms
- Potential challenge is accountability without authority - underwriters may be denied the autonomy they need to meet their objectives
2
Q
Decentralized Insurers
A
- Gives more autonomy and discretion to its underwriters
- Less rigidity, underwriters do not have to refer decisions to their superiors as often
- One drawback that can arise is the lack of consistency from the underwriting team applying risk assessment and settling terms
- Less predictable results
3
Q
Effects of Mergers and Acquisitions
A
- Can be a clash of corporate cultures
- Factors include classes of business pursued, aggressive or conservative in pursuing and accepting risk, different marketing strategies
4
Q
Sales or Underwriting
A
- Sales focused more concerned on volume and rapid, efficient underwriting
- Underwriting focus might specialize in large, complex risks where careful understanding and underwriting of the risk is emphasized
5
Q
Impact of Technology
A
- Underwriters now have increased and often instantaneous access to information
- Information overload is a concern
- Turnaround time has reduced significantly, speed is a factor that cannot be overlooked
6
Q
Global Influences
A
- Canadian-owned insurance companies account for 1/3 of the Canadian industry’s annual premium volume. Rest is divided among foreign insurers
- American and British influence - Lloyd’s and business interruption forms (gross earnings and gross profit)
7
Q
Social Trends
A
- Faster pace of modern life has created a highly mobile society
- Canada is becoming more litigious
- Increase in abuse-related lawsuits
- Environmental contamination
8
Q
Privacy Concerns
A
- Safety, security, and improper sharing of personal information
- Electronic payments at point of sale
9
Q
Judicial Trends
A
- Underwriters should pay attention to judicial trends and court decisions regarding novel situations, as they will not only set precedent for future proceedings but also impact what underwriters need to consider when making decisions