Page 10 - Personal Underwriting Mandates & Guidelines - Binder - Version 3

General
○ The proposal form and all disclosure questions relating to previous claims, previous cancellations etc. must be completed by the directors, shareholders, or a person in authority in respect of the assets or the company we are insuring.
○ If the policy is in the name of an Estate Late and the estate is for a company or a CC, it is seen as a juristic entity. If the estate is in the name of a person, the policy is treated in the same manner as a natural person.
Policyholder – insurable interest
For purposes of Personal Lines underwriting the customer/proposer/policyholder should be the owner of the insured item. The law states that clients must prove that they stand to suffer a financial loss because of their relationship to the item.
They may have rented the item or be legally responsible for the item, for example an item used by an ex-wife that the policyholder is legally bound to support. In such a case the policy should either be endorsed or the other party noted as a co-insured For Their Respective Rights & Interests (FTRR&I) to avoid any complication at claims stage when the payment is made.
Partner or spouse
Partner/spouse means the person to whom the insured is married or their co-habiting partner who live with the policyholder permanently at the insured address. If an insured is joined in marriage with two or more persons, only the partner who is nominated by the insured and listed in the policy schedule as a partner will be covered, subject to the terms and conditions of the policy.
Policyholder previous insurance history – underwriting considerations to accept or decline
If the risk was cancelled, declined or had special terms or conditions applied by a previous insurer, the reason must be established and the acceptance of the policy/risk considered based on this information. The start date of cover should be conditional upon agreed risk-mitigating terms and conditions.
Risks must not be accepted if the applicant’s claims history is not satisfactory unless agreed by the mandated portfolio or underwriting managers in the binder facility. The following points relating to the loss ratio and number of claims must be considered:
○ If the loss ratio is above 65%, the risk is not ideal unless there was one large loss in the past three years.
○ If the loss ratio is below 65% but the number of claims exceeds two claims for the same risk in 12 months, then these clients are possibly multi-claimants. Acceptance should be considered carefully based on the type of claims and monetary value of the claims submitted. Pay attention to trends and see whether a client continuously claims under a specific section or for a specific item, for example cell phones under the All Risks section which may then require higher excesses or suspension of cover for that specific item or category of item.
○ If at least one claim in the last 12 months or three claims over the last 36-month period occurred and the policy has a loss ratio of over 100%, the client is considered a multi-claimant.
Risks with evidence of high loss ratios/multi-claimants should not be accepted unless additional security or preventative measures (corrective action) are implemented. Where a client continuously claims under a specific section of the policy, cover for that specific section may be declined.
Personal Underwriting Mandates & Guidelines – Binder – Version 3 9