Caib 2 Chapter 2 - Underwriting

1. Completed Application

2. Photos of the risk, additional written info including, expiring premiums, details of losses, financial statements

3. Any additional verbal information that the underwriter might find useful in evaluating the risk

1. Assists in the identification of loss exposures

2. Helps eliminate the purchases of coverage's that the business doesn't need

3. Assists in the development of underwriting information required by the insurance company

1. Alerts brokers of possible loss exposures

2. Ensures that the needed coverage's are not forgotten

3. Helps to reduce the potential for E & O

1. Fire resistive (Lowest rate given) Steel frame encased with concrete & meets the minimum 2-3 hour carefully controlled fire testing

2. Non Combustible(all structural supports made of steel, iron, concrete or other non combustible material

3. Frame (Highest rate given)

4. Heavy Timber (old construction)

5. Ordinary (Brick/joist & concrete block/ wood

1.Roof

2.Wiring Copper is most common type of wiring used

3.Plumbing

4. Heating

1. Heating - (what's the source, borrowed from another building, gas, oil, natural or liquid propane, coal or wood)

2. Electrical Services- Copper or Aluminum

3. Detachment-distance to neighbouring buildings, heights, const & occupancy

4. Protection- hydrants, fire hall volunteer or paid

5. Occupancy- of the insured as well as the proximity to neighbouring buildings, factor into the underwriting (what type of business are in the buildings (welders, bakeries, nightclubs)

Public - Refers to external protection for the property, Fire Department paid or volunteer,how far away are the hydrants

Private: What the insured has done to prevent a loss,

Adverse selection occurs when the applicants when applicants for insurance are largely those most likely to have a loss. Too many of these insured's will increase the overall claims of the insurer.

Risk Classification: Is the grouping or classification of risks according to established criteria based largely on their profitability for loss as a class

Individual Risks considers individual submissions on their own merits regardless of the class to which they belong

1. Rising claims costs due to inflation

2. Changes in interest rates being paid to Insurances companies on their investments

Is characterized by intense competition between competitors, as a result rates tend to be low

Occurs when the profit margin is low, this forces out some of the competition. As a result insurers use a more disciplined underwriting approach. The insured usually

A condition relating to the use of tangible property which could cause a peril to occur

-it can be a characteristic of the risk itself or of the environment in which it is located

examples- occupancy, poor housekeeping, external exposures, geography & protection

Refers to the attitude of the client. Indicators of morale hazard are indifference to loss & poor management(lack of regard for protecting property frequently results in a loss)

Refers to the subjective characteristics of the applicant that could cause a peril to occur, financial condition, associates ( questionable business practices ) frequent confrontations with police

1- Failure or Malfunction of mechanical equipment (20%)

2-Arson or suspected arson (25%)

3- misuse of source of ignition (children with matches)