Page 161 - Fire Insurance Ebook IC 57

The Insurance Times

The selection of the business

This involves careful scrutiny of the business acceptances with a
view to making a proper assessment of the fire hazards involved.

The right decision will depend upon the insurers'
assessment of the probability of

(a) an outbreak of fire,
(b) of its spread in relation to the total value at risk and
(c) of a catastrophic loss.

The fixing of retentions

The term "retention" refers to the amount which an insurer is prepared
to retain for his own account on a risk does not transfer it to other
reinsurer.

The retentions are fixed on the basis of the following
general factors:-

a) The financial status of the insurers
b) The premium income of insurers.
c) The experience in the class, which involves : (a) The degree of fire

hazard present, (b) The extent of the damage likely to be sustained.
(c) The possibility of fire extinguishment.
d) The amount of premium income in the particular class of risk.

The individual features in the risks which affect limits
may be considered as follows :-

a) The physical nature of the risk, its construction, size, the processes
carried on and the class of goods stored or used therein.

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