Page 34 - Personal Underwriting Mandates & Guidelines - Binder - Version 3

Motor
MOTOR
This section deals with insurance cover for motor vehicles, motorcycles, caravans and trailers.
GENERAL UNDERWRITING PRINCIPLES
A key outcome of this section is risk selection, where each vehicle should be priced individually (as opposed to matching existing terms or focusing on the total premium of the Motor section) and reasonable underwriter discretion applied. Two policies identical in every respect apart from the vehicles insured may attract different premiums. If one has all imported vehicles and the other all locally manufactured ones (of the same value), the first may be more expensive due to cost of parts, etc. The same goes for levels of technology.
We must price different vehicles according to their risk profile (including cost of repairs as well as likelihood of claim occurrence). We must not follow the market by rating on a sum insured only; this will lead to overall degeneration of our pricing strength and consequently general rate increases instead of individual risk rating.
UNDERWRITING AND RATING CONSIDERATIONS
To ensure accurate rating and application of specific underwriting and acceptance criteria, detailed information must be requested from the insured as a variety of criteria is used to adequately rate the risk.
Rating models
The insurance market, particularly the personal lines motor industry, has become more and more competitive. The principles on which rates are based have evolved and we compete in a market where our competitors have incorporated a more scientific approach to pricing.
For Hollard to remain relevant and competitive, we will focus on continuous enhancement of our rating model(s). The rating models will be updated on an as-and-when-required basis. Our aim is to have at least one significant rate upgrade per annum. The new rating model has been improved with the introduction of a number of new questions and factors that influence rating. ITC insurance risk score outcomes will be fully integrated into our rating methodology in the near future.
Excess waivers must not be offered to regular drivers under the age of 25 and/or a person who has had a driver's license for less than two years. This cover must also be removed for multi-claimants.
Sum insured
The SAIA Code of Conduct stipulate that vehicle values must be adjusted on a regular basis. The review of this value must occur at least once per annum (at renewal or anniversary date). Complete and valid data will not only enable us (the binder holder and Hollard) to ensure compliance with the SAIA Code of Conduct but also support improved performance of the binder facility’s portfolio.
Vehicles and motorcycles that are insured on a retail basis are updated with the latest retail value from Mead & McGrouther (M&M) at every renewal on black box products.
○ As schedules reflect the term “retail value” instead of the actual vehicle sum insured, it is critical to ensure that we obtain the correct make and model of a vehicle from the cover start date.
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