AU 60 - Terms - Commercial Underwriting Principles

A joint venture is an unicorporated association of two or more entities that undertakes a specific transaction or activity of usually limited duration. Corporations, partnersihps, and sole proprietorships can be members of a joint venture

Briefly define a joint venture

NAICS is a comprehensive taxonomy of business activities that classifies all economic activities into twenty sectors. Underwriters find the NAICS codes useful in understanding the insured's business activities and those of related businesses and to gain additional insight into activities that might be conducted by the insured. By reviewing cross-references, underwriters can also determine activities that the insured likely does not do. The hierarchical approach used by NAICS may help refine underwriters' thinking about how business activities are usually conducted in any particular industry niche

Many insurers encourage their underwriters to use the NAICS in addition to ISO classification in order to gain a broader understanding of accounts. Describe how the NAICS is useful to underwriters

" An insurer that becomes more restrictive in its underwriting criteria will usually see a reduction in premiums written. Because incurred losses remain outstanding from the prior period that had a less restrictive underwriting policy, the loss ratio component of the combined ratio will likely deteriorate. With this reduction in premiums written, the expense ratio will increase, even though the insurer's underwriting expenses might have remained relatively unchanged

An insurer decides to make its underwriting criteria more restrictive. Explain how this change affects premium volume and the insurer's combined ratio

The federal Motor Carrie Act requires insurance policies covering vehicles subject to the act to provide blanket coverage for all owned or hired autos at specified limits of liability

Carlos is underwriting an application for business auto coverage for a trucking company that will offer shipping services in several adjoining states. Carlos realizes that the policy must provide blanket coverage for the trucks at a higher limit of liability than he would normally approve in similar policies. What type of regulation is affecting Carlos's underwriting decision in this matter?

General partnerships are a form of partnership in which each partner usually has an active role in the business and assumes unlimited joint liability for all the partnership debts. In contrast, limited partnerships enable their limited partners to avoid having unlimited liability.

Contrast general partnerships with limited partnerships

Public corporations are a type of corporation that is owned by the general public. Private corporations are owned by only a few stockholders, and ownership of their stock is usally not open to the public

Contrast public corporations with private corporations

Routine decisions are those for which the line underwriter clearly has decision-making authoriy according to the underwriting guidelines. Nonroutine decisions involve submissions that fall outside the underwriter's authority

Contrast routine underwriting decisions with nonroutine underwriting decisions

Multiple interest insured under one policy may share coverage limits. Unless higher coverage limits are purchased, the insured might have less insurance coverage than if separate policies had been purchased

Covering one insured's multiple interests under one insurance policy rather than under separate policies may affect policy limits in what way

The definition of "employment" presumes the existence of either an express or an implied contract of hire. The employee-employer relationship is a contractual one, and valid employment contracts have the same essential elements as all binding contracts. Each party must agree to the arrangement, and each party must have a reasonable expectation of deriving a benefit

Describe how contract principles relate to the definition of "employment"

A notation next to a specific classification in the underwriting guide might indicate that a senior underwriter must review and approve an application from that classification before it is processed further. Depending on the concerns that underwriting management places on a classification, underwriting approval might be required from the line udnerwriter's branch manger or a staff underwriter at the home office

Describe how insurers communicate underwriting authority through underwriting guidelines

The common-law test of an employer-employee relationship is the employer's right to direct and control the employee. Evidence of the employe-employee relationship can include whether the employer sets work hours; provides training, tools, and supplies; pays by the hour or pays a salary; and controls the means of accomplishing the work and its details

Describe the "direction and control" test of an employer-employee relationship, including evidence that might be used in making the determination

Underwriting management usually establishes guidelines, such as total premium amount, for underwriters that encourage them to order risk control reports selectively. Another approach to controlling costs is to purchase the services of an independent contractor who specializes in risk control work

Describe the approaches to controlling the costs of ordering and using risk control reports

If loss exposures, risks, or policy limits on an application exceed an underwriter's authority, they will seek approval through supervisory and management ranks within the underwriting department

Describe the approaches underwriters take to ensure that the policies of accepted applicants adhere to underwriting guidelines

"Underwriters ensure the adequacy of policyholders' surplus by - adhering to underwriting guidelines - making certain that all loss exposures are correctly identified - charging adequate premiums for the applications that are accepted"

Describe the approaches underwriters take to ensure the adequacy of policy-holders's surplus

"To minimize the effects of adverse selection, underwriters - carefully select the applicants whose loss exposures they are willing to insure - charge prmeiums that accurately relflect the loss exposures for those applicants they select - monitor applications and books of business for unusual patterns of policy growth or loss"

Describe the approaches underwriters take to minimize the effects of adverse selection

An insurer's financial capacity refers to the relationship between premiums written and the size of the policyholders' surplus or the insurer's net worth

Describe the components of an insurer's financial capacity

PAAS's guides provide detailed information about all ISO general liability classifications and about the workers compensation classifications of the National Commission on Compensation Insurance. For each classification code, the guides include a descriptive analysis of a business's operations, suboperations, processes, and if applicable, products. They also list state execptions to each code and provide state-specific interpretations on the intent and proper application of each classification. Cross references to the NAICS and other classification systems are also provided

Describe the general contents of classification guides published by the Insurance Services Office, Inc (ISO) Premium Audit Advisory Serice (PAAS)

"Effective account selection by line underwriters is essential to attaining these goals: - Avoiding adverse selection - Charging adequate premiums for accounts with a higher-than-average chance of loss - Selecting better-than-average accounts for which the premium charged will be more than adequate - Rationing an insurer's available capacity to obtain an optimum spread of loss exposures by locaiton, class, size of risk, and line of business"

Describe the goals of effective account selection by line underwriters

The insurnace application captures the name and address of the individual or organiation that wants to buy insurance and the types and amounts of insurance desired. A properly completed application also provides the information needed to classify the account for rating purposes and to determine the premium. In addition, the application contains information that the underwriter needs to evaluate the submission

Describe the information that is captured on an insurance application

Major sources of financial data include the financial statements of companies and reports from financial reporting services

Describe the major sources of financial data

Predictive modeling can procide a consistent way to review individual applications that improves for the overall profitability of a book of business. It can also help in managing a large book of business for which conducting an in-depth underwriting review on every account would be too costly

Describe the potential advantages of using predictive modeling in making underwriting decisions

A loss payable endorsement protects the interests of lenders that have a security interest in personal property, owners of property leased to the insured, and purchasers or sellers under a contract of sale

Describe the purpose of a loss payable endorsement to a property insurance policy

A 10-K report provides not only extensive financial information on a company, but also a detailed history of the company, a description of current operations, and possibly, plans for the future

Describe the type of information provided in a 10-K report

The name of each prior insurer and policy number are usually requrested on the application, along with a sketch of prior coverage, premium paid, and policy expiration date

Describe the types of information about prior insurance that are provided on an insurance application

The internet can provide a low-cost way for underwriters to search for references to the insured.In many instances, accounts maintain web sites that provide a description of the business and the types of work they do. When available, this information serves to broaden the underwriter's understanding of the account and confirm information already obtained.

Describe the types of information an underwriter can obtain by using the internet

Reinsurers may expressly exclude reinsurance coverance for loss exposures covered by underlying manuscript forms developed for a particular insured or covered by underlying forms developed independently of an advisory organization

Describe the types of underlying insurance forms that may concern reinsurers

One way to verify values involves comparing values on the submission to an outside estimate of the values. Some fee for serviecs companies, for example, estimate building values as part of their reports. Producers often have a "value estimator" to help determine values. In many cases, these are the same tools that underwriters use. Also, underwriters can hav ethe applicant or insured hire an appraisal company to appraise the property.

Describe the ways an underwriter can verify insurance values submitted by the insured

"Employee experience can be measured by 1 the average length of time the organization's employees have been in the business 2 employees' longevity with the organization, which has the additional benefit of indicating the level of employee loyalty the account might have"

Describe two measures an underwriter might use to determine the level of experience of an account's employees

Unfair discrimination can result from the unfair application of standards as well as from underwriting decisions that are not supported by statistical evidence

Describe two ways that unfair discrimination could result from underwriting practices

Insurers denying coverage must provide a written explanation directly to applicants or must inform them that a written explanation is available on request. Some states require that, if a producer represents the applicant, insurers provide written notice of declination direclty to the producer, and the producer then forwardss the notice to the applicant.

Describe typical notice requirements to which an insurer must adhere when denying coverage ot an insurance applicant

Adding an additional insured to a liability policy may change the account's underwriting acceptability. The underwriter usually has little information about this party's liability loss exposure other than knowledge of a relationship between the insured and the additional insured. Even if the underwriter can identify correctable problems that present a liability exposure, often little can be done to make the additional insured take corrective action. Additional insureds also may place additional demands on the insurer

Describe underwriting concerns that might arise from an insured's request to add an additional insured to a liability policy

"An underwriter would reach these conclusions - They are breaking even, no profit - They are losing money on their underwriting activities - They are making an underwriting profit" "

Describe what an underwriter would conclude about each of the following combined ratios - A combined ratio of exactly 100% - A combined ratio of greater than 100% - A combined ratio of less than 100%

Insurers use the combined ratio to measure the success of underwriting activities

Describe what insurers use the combined ratio to measure

Line underwriters evaluate individual accounts for acceptability and execute underwriting policy by following practices and procedures outlined by staff underwriters. Staff underwriters work closely with underwriting management to perform activities essential for profitable risk selection

Distinguish between the activities of line underwriters and those of staff underwriters

Compliance with underwriting guidelines ensures that coverage limits and accepted loss exposures will not exceed the insurer's treaty reinsuranec, because staff underwriters reflect those treaty limitations in the guidelines.

Explain how compliance with underwriting guidelines ensures adherence to reinsurance treaty limitations

Pricing standards enable insurers to determine levels of premium adequacy by comparing premiums charged to the established pricing standards. Insurers also track the extent to which their underwriters deviate from the insurer's established pricing for specific classifications. This information might be useful in determining the extent to wihch the underwriter's book of business is underpriced or overpriced and where pricing adjustments might be made, should market conditions change

Explain how pricing standards benefit insurers

To build a good working relationship with underwriters, producers should clearly understand the type of accounts the insurer preers to write, as well as the insurer's underwriting guidelines

Explain how producers can build a good working relationship with underwriters

Rapid premium growth results in a reduction in policyholders' surplus to pay for expenses generated by that growth, because of conservative statutory accounting principles used in insurance. This contraint often precludes prmeium expansion unless the insurer purchases reinsurance or obtains moer capital

Explain how rapid premium growth can cause insurers to experience excessive premium-to-surplus ratios

Staff underwriters work cooperatively with the actuarial and legal departments to develop new coverages and modify existing coverage forms developed by advisory organizations

Explain how staff underwriters are involved in the development of coverage forms

Underwriting guidelines that are not being followed may be either outdated or considered unrealistic, which could indicate that a critical review for updates is required.

Explain how underwriting audits provide staff underwriters with information on the effectiveness of existing underwriting guidelines

Underwriting guidelines provide a structure for underwriting decisions by identifying the major considerations underwriters should evaluate for each type of insurance the insurer writes.

Explain how underwriting guidelines provide a structure for underwriting decisions

MVRs are not perfectly accurate and many accidents or violations never apprea on an MVR due to factors such as variations in reporting violations in different jurisdictions or clerical errors in processing traffic citations

Explain why a motor vehicle report (MVR) might not be perfectly accurate

Insurance rates assume that each insured makes a fair contribution to the pool from which many pay the losses of a few. Misleading statements on an application might lead to a lower rate than the loss exposure justifies. The insured benefits at the expense of other policyholders and receives an unjust reward for its lack of truthfulness

Explain why insurance fraud is a serious problem for the insurance-buying public

complaince with levels of authority ensures that the insurer accepts applcants within its underwriting policy

Explain why it is important that underwriters operate within their assigned levels of underwriting authority

Loss history is one of the most important items of information an underwriter obtains about an account because past losses are a good indication of the types of losses that the account will present in the future

Explain why loss history is one of the most important items of information obtained by underwriters

Professonal corporations do not limit the liability of their shareholders for their own professional acts because such limitation would be contrary to public policy

Explain why professional corporations do not liimt the liability of their shareholders for their own professional acts.

" Some regulations to prevent insurance solvency apply to the underwriting funciton because inappropriate underwriting practices can drain an insurer's surplus to the point of insolvency

Explain why some regulations to prevent insurance solvency apply to underwriting practices

Underwriters rely on the producer because they are the first person to interview the prospective client,see the property or operations to be insured, and evaluate the account's exposure to loss.

Explain why underwriters rely on the producer more than on other sources of information when reviewing accounts

Underwriters should not ignore general inforation because it helps put the account specific information in context

Explain why underwriters should not ignore general information when evaluating an account

Underwriters sometimes find that knowing hwo the individual partners are in a small partnership is just as important as knowing who the owner is in a sole proprietorship because each partner in a small partnership will likely have a significant role in the partnership's management, and membership changes in a small partnership mgith change the character of the insured organization

Explain why underwriters sometimes find that knowing who the individual partners are ina a small partnership is just as important as knowing who the owner is in a sole proprietorship

In most cases, the members of a joint venture are a more important underwriting factor than are the members of a partnership because the viability of the joint project depends on their combined expertise and financial resources. Substituting one member for another usually has less effect on a partnership than on a joint venture

Explain why, in most cases, the members of a joint venture are a more important underwriting factor than are the members of a partnership

Property policies describe the property to which the coverage applies and limit recovery to each party's insurable interest. Liability insurance coverage forms, however, do not try to measure insurable interest but rather give complete protection to each party named as an insured. In attempting to provide necessary coverage, Liability policies occasonally provide duplicate coverage

For an insurance program that covers common interests of separately owned entities, why is it more complicated to identify and address different interests relating to liability than those relating to property

Hakim's policy contained a loss payable endorsement

Hakim, owner of an apartment complex, leased steam carpet cleaning equipment from Small Appliance Rental. A fire in an apartment destroyed the equipment. Hakim's property insurer reimbursed Small Appliance Rental for the replacement cots of the equipment. What type of endorsement did Hakim's policy contain?

Most property policies have policy provisions that give mortgageholders separate rights from those of the insured. Such provisions are designed to preclude the need of mortgageholders to purchase a separate policy to protect their secured interest

How are mortgageholders' interests protected under property insurance policies

A Subchapter S corporation provides limited liability to its owners and tax treatment similar to that of a partnersihp. Profits, losses, and other tax items are passed through to the shareholders and are taxable to them on their individual returns

How are profits, losses and other tax items handled under a Subchapter S Corporation

These laws require underwriters to proivde auto insurance at specified risk limits they would not otherwise accept. This requirement affects the auto rating classification system and the spread of costs among insureds

How do compulsory auto insurance and financial responsibility laws affect auto insurance underwriters?

If rates are inadequate or biased, underwriters cannot be sure that the classification system will distribute the costs of insurance coverage equitably. Accurate distribution of costs is key to achieving equity among insureds - a goal of both rate and underwriting regulation. Rate regulation also seeks to ensure that the rates for each class are adequate, fair, and not excessive, and underwriting regulation strives to make certain that insureds are assignd to the correct classification

How does rate regulation affect underwriting?

Solvency regulation can indirectly influence underwriting by limiting the amount of new business an insurer can write under some circumstances

How does solvency regulation affect underwriting?

A key underwriting attribute that may be revealed by an organization's form of ownership is the quality of its management

Identify a key underwriting attribute that may be revealed by an organization's form of ownership

"Five advantages associated with partnerships are that: - They receive favorable tax treatments - They provide greater access to capital through the combined wealth of the partners - Each partner often brings needed talents to the partnership - Partnership management responsibilities can be spread among the partners - Partnerships are easy to establish, with few governmental restrictions on their formation"

Identify five advantages associated with partnerships

"Regulation may affect underwriting policy in these ways: - Insurers must be licenses to write insurance in each state in which they do business - Rates, rules, and forms must be filed with state regulators - Underwriting guidelines are required to be filed in some states - If consumer groups believe that the insurance industry has not adequately served certain geographic areas, regulatory focus on insurance availability can lead to requirements to extend coverage to loss exposures that an insurer might otherwise not write"

Identify four ways that regulation may affect underwriting policy

The most important attribute associated with corporations is their ability to raise capital

Identify the most important attribute associated with corporations

The primary difference between a sole proprietorship and a partnership is that, unlike a sole proprietoship, a partnership is recognized as an entity distinct from its individual members for certain purposes

Identify the primary difference between a sole proprietorship and a partnership

LLCs hav the same tax advantage of partnerships, in that the LLC's owners and members pay taxes only on profits

Identify the tax-related advantage associated with LLCs

"Underwriters use these categories when determining whether additional informaiton should be obtained: - Essential information - Desirable information - Available information"

Identify the three categories of information used by underwriters to determine if additional information is needed

These publications include rating manuals, circulars, form manuals, and classification guides.

Identify the types of publications provided by insurance advisory organization

The inclusion of a sole proprietors name and the name of his or her business on the dec page makes it clear to whom the insurer is providing coverage and might cause an owner who is transferring the insured property to realize that the policy cannot be transferred directly to the purchaser. It also may alert the business owner to contact his or her insurer when new properties, new construction, and new ventures are added so that extension of coverage provisions of the policy are not tested by a claim

Identify three advantages associated with the inclusion of a sole proprietor's name and the name of his or her business on the declarations page

The applicants ownership form should provide the underwriter with a sense of the account's size, scope, and the potential complexity of its loss exposures

Identify three characteristics about which an insurance applicant's form of business ownership can provide underwriting information

"Three disadvantages associated with corporations are that corporations - Can be difficult to create - Activities of corporations are restricted and monitored - Corporate earnings are taxed twice"

Identify three disadvantages associated with corporations

Three primary factors that contribute to the popularity of sole proprietorships are ease of formation, limited capital requirements, and the ability of the owner to fully control the business. Other factors include their ability to be easily dissolved and that profits are included in the owner's personal income and not taxed separately

Identify three primary factors that contribute to the pupularity of sole proprietorships

In relation to underwriting, these laws generally prohibit practices that would result in unfair discrmination against an insurance consumer

In relation to underwriting, unfair trade practices prohibit acts that would lead to what results

Comparisons of this informaiton across different insurance lines can reveal inappropriate underwriting in one particular line, a practice that might be overlooked ina study of general trends

In a market conduct examination of an insurer's underwriting function, what might be revealed by a comparison of cancellation and nonrenewal practices across different lines of insurance?

The examination team would focus on the underwriting funciton, looking specifically at the insurer's underwriting guidelines and its record of conformance to those guidelines and to state laws and regulations

In response to several consumer complaints that Insurer has declined coverage to businesses owned by a specific ethnic group, a state department of insurance performs a market conduct examination of Insurer. In general, what would be the focus of the examination?

In the US sole proprietorships are more prevalent than any other form of business entity

In the US, which of the three most common forms of business ownership is more prevalent than any other

"(Incurred losses and loss adjustment expenses/ earned premiums) + (Incurred underwriting expenses/ Net written premiums) (14,000,000/20,000,000) + (5,000,000/25,000,000) = .70+.20 = 90% - the ratio indicates that IC is operating a profitable underwriting practice" "

Insurance Company has incurred underwriting expenses of $5 million, incurred losses and loss adjustment expenses of $14 million, net written premiums of $25 million, and earned premiums of $20 million. - Determine Insurance Company's trade-basis combined ratio - Explain what this ratio indicates regarding Insurance Company's use of its premium dollars

Insurance Company's practices may be unfairly discriminatory and in violation of regulation unless the company can provide statistical evidence that serving meat exposes a restaurant's premises to a higher level of risk

Insurance Company refuses all applications it receives for property coverage of restaurants that serve meat, but approves policies for many other dining establishments. Is the company's approach a possible regulatory violation?

"Any five of these are principal sources of underwriting information: - producers, insurance applications, inspection reports , government records, financial rating services, loss data, field marketing personnel, premium auditors, claim files, production records, and consultants' reports"

List five princpal sources of underwriting information

"Wrap-ups offer these advantages: - They enable one insurer to cost-effectively provide risk control services - They enable the project sponsor to negotiate a volume discount on the consolidated insurance costs of a construction project - They reduce disputes between parties - They provide a uniform insurance program for the project sponsor and participating contractors"

List four advantages of wrap-ups

An underwriter may find information about qualitative characteristics of an account's management from risk control reports, premium audit reports, and claim files; from the producer; and from the underwriter's first-hand knowledge of the account

List several sources from which an underwriter could seek information about qualitative characteristics of an account's management

The underwriting cycle affects premium levels, capital allocation strategies, investment strategies, and insurer profitability

List some aspects of an insurer's operations that are affected by the underwriting cycle

"An underwriter might want additional information for any of these reasons: - To collect missing information - To investigate conflicting information - To verify the accuracy of the informaiton provided - To handle complex accounts or ones that present a relatively high degree of risk"

List the reasons why an underwriter may need additional information beyond what is provided on an insurance application

"The three common abbreviations used to denote a sole proprietor and his or her business on the declarations page are these: - ""d/b/a"" Doing business as - t/a Trading as - aka Also known as"

List the three common abbreviations used to denote a sole proprietor and his or her business on the declarations page

"Characteristics of independent contractors include these: - Unlike employees, independent contractors are not subject to direction and control regarding the details of the work - An employee whose work is unsatisfactory may be discharged. When an independent contractor's work is unsatisfactory, the usual recourse is to sue for breach of contract. - Unlike employees, independent contractors usually offer servics to the public"

List three characteristics of independent contractors

"Three types of regulations designed to prevent unfair discrimination are - Those that constrain insurer's ability to accept, modify or decline loss exposures - Those that limit allowable classifications - Those that restrict the timing and conditions of coverage cancellation and nonrenewals"

List three types of regulations designed to prevent unfair discrimination

When reviewing an insurer's underwriting department, examination teams focus on the underwriting functions regulated by law: declination, termination, disclosure, and unfair trade practices.

Name the specific underwriting functions a market conduct examination team would focus on when reviewing an insurer's underwriting department

The policy's dec page would use the abbreviation also known as, which allows a person to include in the policy a fictitious name that has been registered with the state

Phil is an insurance applicant who wishes to insure his sole proprietorship, a hair salon, but does not want to conduct the business under his real name. Instead, he wants to include in the policy a fictitious name that has been registered with the state. Identify the abbreviation that the policy's declarations page would use to indicate a fictitious name.

"Such underwriting guides identify - specific hazards to evaluate - alternatives to consider - criteria to use when making the final decision, ways to implement the decision - methods to monitor the decision. The guides may also provide pricing instructions and reinsurance-related information."

Some underwriting guides contain systematic instructions for handling particular classes of commercial accounts. Describe the instructions such guides might include

"The six are - Race, religion, nationality, etc. - Lawful occupation or profession of the applicant or named insured - Previous declination or termination of the applicant or named insured - Use of residual market mechanisms by the applicant or named insured - Age or location of the property of the applicant or named insured - Principal location of insured motor vehicle"

State laws often expressly prohibit policy cancellation, declination, or termination based on specifically designated considerations. Name six such considerations included in various state laws

Members of an unicorporated association are not generally held liable for actions of the association unless they approved the action or participated in the commission of a tort by the association

Under what circumstances are members of an unincorporated association held liable for the actions of the association

"The undewriting process entails these six steps: a. Evaluate the submission b. Develop underwriting alternatives c. Select an underwriting alternative d. Determine an appropriate premium e. Implement the underwriting decision f. Monitor underwriting decisions"

What are the steps in the underwriting process

Market conduct examinations that focus on underwriting seek to determine whether the insurer's underwriting function complies with applicable laws and regulations as well as with the insurer's internal standards

What do market conduct examinations that focus on underwriting seek to determine?

Insuring corporations is sometimes made more complex because one corporation can own other corporations

What factor adds complexity when insuring corporations as opposed to the other forms of business ownership

"The underwriter must consider these factors before selecting an alternative: - Underwriting authority - Supporting business - Mix of business - Producer relationships - Regulatory restrictions"

What factors beyond the content of a submission itself must an underwriter consider before selecting an underwriting alternative

"An underwriter may suggest these modifications to a submission: - Require loss control measures - Change insurance rates, rating plans, or policy limits - Amend policy terms and conditions - Use facultative reinsurance"

What four major modifications might an underwriter recommend to make a submission more acceptable

The most significant disadvantage associated with sole proprietorships is unlimted liability

What is the most significant disadvantage associated with sole proprietorships?

Many states have changed their laws in recent years to allow professional corporations because of changing Internal Revenue Services regulations and favorable court decisions

Why have many states recently changed their laws to allow professional corporations?

Accuracte classification ensures a pooling of loss exposures whose expected loss frequency and loss severity are similar. Misclassification can produce adverse results, including insufficient premium to cover losses and expenses, inability to sell policies because prices are higher than competitors' prices, and charges that the insurer has violated regulations prohibiting unfair trade practices

Why is it important for the underwriter to correctly classify each loss exposure in a submission when determining the appropriate premium

Specifying the name of a partnersihp in the declaratios is essential because naming the partnersihp along with the individual partners clarifies which enterprise is being insured

Why is specifying the name of a partnership in the declarations essential?

Execssive use of part-time help imght indicate a tendency toward cost cutting, management attitude problems, or the beginning of financial problems. For accounts that appear to have an inappropriate ratio of full-time to part-time employees, underwriters should consider whether extensive reliance on part-time employees could increase the exposure to loss

Why should an underwriter be aware of the extent to which an account's management uses part-time employees?

Monitoring territorial underwriting results can help the insurer to target areas for future agency appointments in profitable regions. Poor results could indicate areas from which the insurer might withdraw or in which the insurer might raise rates, if permitted by regulators

Why should underwriters monitor underwriting results of territories or geographic locations