Underwriting considerations Flashcards
How has the Consumer Insurance (Disclosure and Representations) Act 2012 affected underwriting?
The Act shifts the duty of disclosure from the consumer to the insurer, requiring consumers to accurately answer questions posed by the insurer.
What does the Insurance Act 2015 require from commercial customers in underwriting?
Commercial customers must give a ‘fair presentation’ of their risk and conduct a ‘reasonable search’ for the insurer, providing accurate and clear information.
What are major underwriting factors affecting claims?
Key factors include industry-specific risks, the average claim per member, and the proposer’s risk characteristics compared to the average.
What factors are considered in motor insurance underwriting?
Driver’s age
Vehicle type
Usage
Storage
Geographical area
Driving record
Vehicle modifications.
What factors affect health insurance underwriting?
Occupation
Age
Lifestyle / physical condition
Medical history
Family circumstance
How does occupation influence health insurance underwriting?
Higher risk occupations have higher premiums
What are important underwriting factors for household insurance?
Constructionb
Location
Security
Crime rate
What factors are considered in travel insurance underwriting?
Destination
Purpose / duration
Group policies
Pre-existing conditions
Commercial property - fire and special perils
Building use
Types of goods
Construction
Safety features
Risk management
Location to perils
What factors affect underwriting for glass insurance?
The building’s use (likelihood of glass being broken) and the geographical area (e.g., vandalism risk in town centers) are key considerations.
Business Interruption Insurance
Insurer assesses speed of business recovery (e.g., alternate premises, machinery availability, seasonal dependencies).
Extended Warranties
Typically not underwritten but based on product failure statistics; premiums set accordingly.
Credit Rating
Cross business lines where insurers consider credit rating as part of acceptance and price of risk
Fraud Prevention
Fraud includes inventing losses, exaggerating damages, or creating fake events. Impact on insurers and genuine policyholders includes higher costs. Prevented through the Insurance Fraud Bureau and shared claims data.
Claims Handler Role
Identifying fraudulent claims by recognising patterns, such as claims soon after policy inception or renewal.
Insurance Fraud Bureau
Coordinate industry wide action
Run public education campaigns
Operate centres of fraud expertise
Motor Insurance Anti-Fraud and Theft Register (MIAFTR)
Database of details for total loss and theft claims
Motor Insurance Database
Contains details of all registered vehicles in the UK and related insurance details
Claims and UW exchange
Database of incidents reported to insurers by personal insurance policyholders
Art loss register
Increases recovery rate of stolen art
Deters theft by making resale more difficult
Application fraud
Fraudulent submissions at the application stage
Direct discrimination
Discrimination of protected characteristics
Associated discrimination
Discrimination because of association with someone with a protected characteristic
Perceptive discrimination
Discrimination based on perception of having a protected characteristic
Indirect discrimination
Rules that unfairly disadvantage certain groups based on protected characteristics
Where must data breaches be reported
Information Commissioners Office
