Page 40 - Insurance Times December 2015 SAMPLE

5) Classification of Covers v Will the firm have to raise additional capital if cash
flows decline?
6) Rating Process
v Could large uninsured losses push the firm into financial
Now we will discuss the above fundamental aspects which distress?
are generally considered for underwriting every liability
insurance. However these aspects will be examined more v What is the past experience of loss and what preventive
specifically in the particular liability policy. actions taken by the prospect?

1) Risk analysis & CASE Study v What is the next possible event which may affect the
existing probability and severity?
Risk Identification and Risk analysis are the fundamental
step towards insurance underwriting. For risk analysis in v What are the existing liability insurance covers and the
liability insurance a detailed study called "Case Study" is a insurers, if any?
must for an underwriter. Before we discuss about CASE
Study, we need to know common questionnaire on Risk CASE Study
Identification for liability risk;
v What types of activities are carried out by the prospect The above few questions set in a example for risk
identification and analysis can be programmed into a
or the proposer? detailed and systematic study called CASE Study. In
Property Insurance Underwriting, risk anaysis is basically
v What is the volume of the business or activities of the based on COPE study while Liability Insurance requires CASE
prospect? Study for risk analysis and prudent underwriting rating the
risk and deciding coverage, exclusions and terms &
v What sort of third party legal liability risks are involved conditions.
in the activities of the prospect?

v Whether all those legal risks are insurable? COPE includes Construction, Occupation, Protective

v If yes, what could be general trends of court awards - Measures and External Exposures. In property insurance

both probability and severity? COPE study is carried out through the thorough analysis of

the following fundamental aspects concerning the subject
v What is area or spread of activities- local, regional, matter of insurance;
national or global
1) Construction of Property

v What is the legal jurisdiction and trend of the court 2) Occupation of Property
awards?

3) Protective Measures for property
v What parties might be harmed by firm (customers,

suppliers etc)? 4) External Exposures to the property.

v How might these parties be harmed? Importunately, above COPE study is generally carried out

v What are the security measures taken by the prospect by way of risk inspection and risk analysis of the subject

to minimize probability and severity? matter of insurance for fire, Marine, Motor (OD) and Engg

v What is the potential magnitude of damages? Insurance. This COPE study is carried out in other class of
v What is the potential magnitude of defense costs? property insurance for Misc. Dept in different parameters
and process with some relaxation.

v Will revenues decline on possible damage to firm's

reputation? But in liability insurance, CASE study needs to be carried

v What is the potential magnitude of this loss? seriously and systematically in particular process with

properly-designed questionnaire and program for all types

v What actions may reduce this indirect loss and at what of liability since subject matter of insurance is invisible and

cost? contingent upon legal decision for damages payable to third

v Will products likely to be abandoned or products party due to accident caused by negligence or wrongful acts

recalled? of the insured or his employees.

36 The Insurance Times, December 2015

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