Insurance Underwriting Part I
5- Evaluating underwriting experience
staff underwriters analyze the less and premium data of their own companies 'book of business and the insurance industry by type of insurance ,class, size of loss exposure ,and territory.
Uderwriting steps
-Evaluation of the loss exposures -Determining underwriting alternatives -Selecting an underwriting alternative -Determining the appropriate premium -Implementing the underwriting decision -Monitoring the loss exposure.
Types of Underwriters
-Line underwriters: are primarly responsible for implenting the steps in the underwriting process ,and generally located in insurer's branch or regional offices. - staff underwriters: assist underwriting management with making and implementing underwriting policy,and located at insurer's home office.
Determining Underwriting alternatives
1- Accept the submission as is 2- Reject the submission 3-Make a counteroffer to accept the submission subject to certain modifications.
Evaluating Loss Exposures
1- Gathering information about applicant's loss exposures. 2- understand the applicant's activities,operations and character.
Staff Underwriters Responsibilities
1- Researching the market 2- Researching and developing coverages 3-Evaluating underwriting experience 4-Reviewing and revising rating plans 5- Formulating underwriting policy 6- Developing underwriting guides 7- Conducting underwriting audits 8- Assisting with education and training
Line underwriters Responsibilities
A-Implementing underwriting steps of underwriting proces. B-assist with determining approporiate coverage. C- providing services to producer and policy holders.
3.2-monitoring underwriting activities
BY: analyzing statistical results by type of insurance,class of business,size of loss exposure and territory.
Implementing the underwriting decision
Involves three steps: a- contact the producer/applicant with the decisions good or bad. b- put coverage into effect.issue abinder,send apolicy to the unit or prepare certificate of insurance. c- record the policy and applicant information for accounting,statical ,and monitoring purposes. And it shoukd be coded.
6- Reviewing and revising rating plans
Rates and rating plans must be reviewed and updated continually- subject to Regulatory constraints-to respond to changes in loss experience,competition,and inflation.
4- Assisting with education and training
Staff underwriters are responsible for determining the educational needs and training of line underwriters
2- Developing Coverages
Staff underwriters modify the insurer's printed policy forms and endorsements to reflect changes in the market conditions or state regulations .
3-Conducting underwriting audits
Staff underwriters visits branches or regional office and review individual underwriting files.
Selecting an underwriting alternative
The underwriters must decide whether to accept the submission as offered , accept it with modifications or reject it .
Underwriting Process
To determine what loss exposures will be insured,for what amount of insurance , at what Price, and under what conditions.
Purpose of Underwriting
To develop and maintain a profitable book of business for the insurer.
Monitoring the loss exposures
Ujderwriters must monitor activity on the individual policies to ensure that satisfactory results are achieved.
Determining the appropriate premium
Underwriters must insure that each loss exposure is properly classified so that it is properly rated.
Underwriters Responsibilities
Underwriters must review applications for insurance and then either accept at an appropriate rate or reject the application.
Types of Modifications
a- Require Loss Measures control to reduce hazards. b- Change insurance rates, rating plans, or policy limits. C- Amend the policy terms and conditions. d- Use Facultative reinsurance.
3.1- Underwriting Audit
is a management control tool used to determine whether the line underwriters are properly implementing underwritng policy.
7-formulating underwriting policy
it is subject to these limitations: 1. Financial capacity 2. Regulation 3. Personnel and physical resources 4. Reinsurance
1- Researching the market
researching the market includes: - the effect of adding or deleting entire type of business - the effect of expanding into additional states or retiring from states presently serviced. - optimal product mix - Premium volume goals.