Underwriting Awareness

Question 1

Once they have all the relevant information what will the underwriter do?

Answer 1

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

Question 2

How are most proposals made for personal lines insurance?

Answer 2

Traditionally via a proposal form, but increasingly via telephone or the internet, particularly through aggregators such as comparison sites

Question 3

How are most proposals made for commercial insurance?

Answer 3

Traditionally via a broker presentation, with additional information available through surveys, site visits, meetings or supplementary questionnaires

Question 4

What will underwriters consider the proposer’s characteristics in relation to?

Answer 4

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

Question 5

What are some underwriting considerations for motor insurance?

Answer 5

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

Question 6

What are some underwriting considerations for private buildings insurance?

Answer 6

Construction
Location
Listed building

Question 7

What are some underwriting considerations for private contents insurance?

Answer 7

Security
Location
Occupation

Question 8

What are some underwriting considerations for travel insurance?

Answer 8

Age
Destination
Group policy
Pre-existing medical conditions
Duration & purpose of travel

Question 9

What are some underwriting considerations for commercial property fire & special perils insurance?

Answer 9

Construction
Usage
Location
Goods stored
Risk management/safety features
Size (number of floors/square footage)
Methods of heating/lighting

Question 10

What are some underwriting considerations for commercial property theft insurance?

Answer 10

Trade
Location
Security
Construction
Moral hazards

Question 11

What are some underwriting considerations for commercial property money insurance?

Answer 11

How much cash is handled?
Storage/security - safes, strong rooms etc
Transportation / transit arrangements
Are employees paid in cash?

Question 12

What are some underwriting considerations for legal expenses insurance?

Answer 12

Employment criteria
Current staff diversity breakdown
Health and safety policies/legislation
Occupation

Question 13

What are some underwriting considerations for business interruption insurance?

Answer 13

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?

Question 14

What are some underwriting considerations for employer’s liability?

Answer 14

Occupation/trade
Loss frequency/severity
Number of employees/payroll

Question 15

What are some underwriting considerations for public liability?

Answer 15

Trade/business

Potential for legal liability

Question 16

What are some underwriting considerations for product liability?

Answer 16

Occupation/trade - what are the goods?
Where are the goods sold? Exports?
Risk management / quality controls

Question 17

What are some underwriting considerations for pollution liability?

Answer 17

Occupation/trade
What materials/chemicals are used?
How are they stored?
What controls are in place? Physical and policies

Question 18

What are some underwriting considerations for professional indemnity?

Answer 18

Occupation/trade
Experience
Professional qualifications
Moral hazards
Potential for damage

Question 19

When may an underwriter intervene at the renewals stage for personal insurance?

Answer 19

When the risk has changed or certain claims have arisen

Question 20

How far in advance of the renewal date should the insured be notified of the renewal terms and conditions?

Answer 20

“In good time”
EG
21 days for commercial
28 days for private

Question 21

Why do insurers prefer their customers renew?

Answer 21

The costs associated with renewal are lower than with new policies

They can more accurately forecast claims patterns

Question 22

What does the FCA require to be in renewal notices?

Answer 22

Current premium
Renewal premium
A note encouraging customers to shop around

Question 23

When are insurers obliged to renew?

Answer 23

Never

unless under a long term agreement

Question 24

What are the aims of a risk engineer?

Answer 24

1. To identify, assess, and improve risks

2. To support underwriters and customers

Question 25

What are the 9 stages of the underwriting process?

Answer 25

1. Underwriting strategy
2. Information Gathering & Risk Selection
3. Risk Assessment
4. Account structure & coverage
5. Rating
6. Pricing
7. Negotiation
8. Issuance
9. Account Servicing

Question 26

What does pollution liability insurance cover?

Answer 26

Pollution or contamination caused by a sudden, identifiable, unintended, and unexpected event