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11/24 M97/February 2018 Reinsurance

H2 Underwriting considerations
This is a specialised class of business and reinsurers will need to satisfy themselves that the reinsured
is sufficiently experienced and competent before committing themselves to participating in any
proportional reinsurance arrangement. In addition to this the reinsured should provide:
• Detailed proposal forms giving information about the insured and the insured risk, such as:
– precise description of the professional activity including details about level of training and
supervisory mechanisms;
Example 11.10
In the UK, the Solicitors Regulation Authority has the power to take disciplinary measures against members in cases
of misappropriation from client accounts, money laundering and mortgage fraud.

– background information relevant to the risk such as client structure and specimen contracts;
– loss record;
– advertising and information brochures;
– original policy conditions; and
– original premiums.

• The professional activity descriptions of the occupations to be insured are subject to changes. In
addition, new types of professional activity may come into existence.
• Details of whether up-to-date, country-specific professional activity descriptions are available.
• Whether current or potential problem areas have been considered because risks are becoming
increasingly complex in economic, legal and technical terms, such as:
– losses emanating from long-tail risks having the inherent exposure of increased expenditure due to
inflation;
– in case of insolvency, claims cannot only be made against the insolvent party but also against its
professional advisers, a situation that is more likely to occur in times of economic recession;
– the likelihood that there is an increasing exposure to foreign aspects due to globalisation; and Reference copy for CII Face to Face Training
– new professional activities needing new coverage concepts.

H3 Types of reinsurance purchased

This type of business can be reinsured on a facultative and treaty basis, and both proportional and
Can be reinsured
on a facultative and non-proportional. Facultative would tend to be used to support incidences where the underlying
treaty basis insurance moves outside of the treaty relationship, such as high exposure to the USA which could be a
treaty exclusion. However, some larger firms of accountants and lawyers have actively sought placement
of their higher layers of cover in the reinsurance market.
Treaty relationships could also be both proportional and non-proportional, although non-proportional
reinsurance is recognised to be the usual basis.

I Medical malpractice

Although this type of insurance is in itself a type of PI, it is handled separately to the other lines and
covers risks from the area of medical and paramedical services, which may lead to claims for
compensation arising from medical malpractice.
The causes include negligence on the part of doctors, auxiliary and nursing staff, shortcomings in the
operation of a hospital and its ancillary facilities, mistakes in the operation and maintenance of
technical plant and equipment, and problems in the organisation and administration of the institution or
hospital.
Be aware
For a medical malpractice claim to be successful there is a need to show that the doctor, nurse, dentist or other
healthcare professional has done something that most other people in their position would not have done. It does not
necessarily follow that because treatment has failed or an operation has gone wrong that clinical negligence has
occurred. Some operations, after all, come with risks, as do some medications.
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Chapter