Underwriting Awareness Flashcards
Once they have all the relevant information what will the underwriter do?
Assess the degree of risk the proposer brings to the common pool
Decide whether to accept, partially accept, or decline the risk
Determine the terms, conditions, and scope of cover to offer
Calculate the premium and negotiate the price
How are most proposals made for personal lines insurance?
Traditionally via a proposal form, but increasingly via telephone or the internet, particularly through aggregators such as comparison sites
How are most proposals made for commercial insurance?
Traditionally via a broker presentation, with additional information available through surveys, site visits, meetings or supplementary questionnaires
What will underwriters consider the proposer’s characteristics in relation to?
The average member of that particular class/group
E.G for commercial insurance they compare the proposer to the average risk in that particular industry
What are some underwriting considerations for motor insurance?
Age Make/Model of vehicle Location Usage Storage (eg street/driveway/garage) Cover required (eg 3rd party only vs comprehensive) Vehicle modifications Driving record/claims history
What are some underwriting considerations for private buildings insurance?
Construction
Location
Listed building
What are some underwriting considerations for private contents insurance?
Security
Location
Occupation
What are some underwriting considerations for travel insurance?
Age Destination Group policy Pre-existing medical conditions Duration & purpose of travel
What are some underwriting considerations for commercial property fire & special perils insurance?
Construction Usage Location Goods stored Risk management/safety features Size (number of floors/square footage) Methods of heating/lighting
What are some underwriting considerations for commercial property theft insurance?
Trade Location Security Construction Moral hazards
What are some underwriting considerations for commercial property money insurance?
How much cash is handled?
Storage/security - safes, strong rooms etc
Transportation / transit arrangements
Are employees paid in cash?
What are some underwriting considerations for legal expenses insurance?
Employment criteria
Current staff diversity breakdown
Health and safety policies/legislation
Occupation
What are some underwriting considerations for business interruption insurance?
How fast could the business get up and running again?
Could they operate from another premises?
Do they have any critical machinery/equipment?
Are replacements readily available?
Is there inter-dependency?
Are they seasonal?
What are some underwriting considerations for employer’s liability?
Occupation/trade
Loss frequency/severity
Number of employees/payroll
What are some underwriting considerations for public liability?
Trade/business
Potential for legal liability
What are some underwriting considerations for product liability?
Occupation/trade - what are the goods?
Where are the goods sold? Exports?
Risk management / quality controls
What are some underwriting considerations for pollution liability?
Occupation/trade
What materials/chemicals are used?
How are they stored?
What controls are in place? Physical and policies
What are some underwriting considerations for professional indemnity?
Occupation/trade Experience Professional qualifications Moral hazards Potential for damage
When may an underwriter intervene at the renewals stage for personal insurance?
When the risk has changed or certain claims have arisen
How far in advance of the renewal date should the insured be notified of the renewal terms and conditions?
“In good time”
EG
21 days for commercial
28 days for private
Why do insurers prefer their customers renew?
The costs associated with renewal are lower than with new policies
They can more accurately forecast claims patterns
What does the FCA require to be in renewal notices?
Current premium
Renewal premium
A note encouraging customers to shop around
When are insurers obliged to renew?
Never
unless under a long term agreement
What are the aims of a risk engineer?
- To identify, assess, and improve risks
2. To support underwriters and customers
What are the 9 stages of the underwriting process?
- Underwriting strategy
- Information Gathering & Risk Selection
- Risk Assessment
- Account structure & coverage
- Rating
- Pricing
- Negotiation
- Issuance
- Account Servicing
What does pollution liability insurance cover?
Pollution or contamination caused by a sudden, identifiable, unintended, and unexpected event
