Study 8 Flashcards
(128 cards)
1
Q
Who do UNDERWRITERS often work with INSIDE their company?
A
Other underwriters in different departments – it’s like a family reunion, but with more risk assessment!
2
Q
True or False: Underwriters only work with people inside their own department.
A
False! They’re social butterflies, interacting with various departments and even people outside the company.
3
Q
Name some professionals EXTERNAL to the insurance company that underwriters might work with.
A
Brokers, insureds (sometimes!), independent LOSS CONTROL inspectors, loss ADJUSTERS, and lawyers. Basically, anyone who can help them figure out if a risk is worth taking.
4
Q
Why is it important for an underwriter to have STRONG PROFESSIONAL RELATIONSHIPS?
A
Because underwriting isn’t just ‘pushing paper’—it’s a NEGOTIATED transaction. And negotiations are way easier when people actually, you know, like each other!
5
Q
What is the main takeaway from this introduction about an underwriter’s success?
A
Cultivating strong professional relationships is KEY. Without them, you’re just yelling into the void (and nobody wants to insure that!).
6
Q
Why don’t underwriters work in ISOLATION?
A
Because they’re part of a SYMBIOTIC relationship with others. Like a clownfish and an anemone, but with less stinging and more spreadsheets!
7
Q
True or False: In our increasingly digital world, relationships between underwriters and stakeholders are less important.
A
False! Arguably, they have more impact than ever before. You need to stand out in that email avalanche!
8
Q
What’s one of the MOST IMPORTANT benefits of good relationships for underwriters?
A
The DISSEMINATION OF INFORMATION. It’s like having a secret cheat sheet for every risk!
9
Q
How do good relationships make an underwriter’s job EASIER?
A
By giving them access to valuable or NECESSARY information and helping them understand other roles to PROACTIVELY prepare for conversations. No more awkward silences!
10
Q
What’s the ultimate goal of building trust through good relationships?
A
Attracting and RETAINING PROFITABLE BUSINESS. Because nobody wants to insure a money pit!
11
Q
What are underwriters EXPECTED to do, just like most professionals?
A
NETWORK! It’s like collecting Pokémon, but instead of monsters, you’re gathering valuable contacts.
12
Q
Is underwriting a purely MECHANICAL process?
A
Nope! It’s an ART concerned with the SHADES OF GREY. Forget the black and white, we’re talking about a whole spectrum of risk!
13
Q
Why do negotiations (which are part of underwriting) need GOODWILL?
A
Because they carry the potential for DISPUTE. Without goodwill, you’re just asking for a fight, and nobody wins those (except maybe the lawyers).
14
Q
What’s the underwriter’s primary role in the organization?
A
To INVEST SHAREHOLDER CAPITAL and execute the insurer’s STRATEGIC PLAN by accepting or rejecting risk. They’re the financial bouncers!
15
Q
Name one way underwriters should always behave PROFESSIONALLY.
A
Avoid POTENTIAL CONFLICTS OF INTEREST and keep transactions PROFESSIONAL. No mixing business with your weekend BBQ plans!
16
Q
What’s another key aspect of professional behavior for underwriters?
A
Maintaining CONFIDENTIALITY AND PRIVACY OF INFORMATION. Loose lips sink ships (and insurance policies).
17
Q
Why is underwriting a ‘phenomenal place to start’ a career in insurance?
A
It showcases TALENT and creates great POTENTIAL FOR FUTURE OPPORTUNITIES in areas like claims, sales, or management. It’s the launchpad to insurance stardom!
18
Q
Name a few groups of insurance professionals underwriters should nurture good relationships with.
A
Other UNDERWRITERS, REINSURERS, BROKERS, AGENTS, RISK MANAGERS, and the CLAIMS, ACTUARIAL, LOSS CONTROL, and LEGAL departments. It’s a whole team effort!
19
Q
Why are relationships with FELLOW UNDERWRITERS invaluable?
A
For CONSULTATION on risks they may not be as experienced or familiar with. It’s like having a built-in ‘Ask a Friend’ lifeline!
20
Q
How might larger insurers divide underwriting responsibility?
A
By REGION or TERRITORY. So an underwriter in Montreal might handle Western Quebec, while Quebec City handles the East. It’s a geographical risk-off!
21
Q
What kind of information might underwriters seek from their counterparts in other branches for large, multi-territory accounts?
A
Operations of the risk, local law, environmental considerations, business climate, or any other RELEVANT features. Gotta get the full picture, eh?
22
Q
What is a MULTI-LINE underwriter?
A
An underwriter who handles ALL or MANY lines of insurance for a given account. They’re the jack-of-all-trades of the underwriting world!
23
Q
What is a MONOLINE underwriter?
A
An underwriter who focuses on a SINGLE LINE of insurance for each account. They’re the specialists, like a brain surgeon, but for equipment breakdown.
24
Q
True or False: There’s a big difference in the evaluative process between monoline and multi-line underwriters.
A
False! Both evaluate the same HAZARDS and characteristics; the process is COLLABORATIVE. It’s teamwork that makes the dream work!
25
When underwriters have discretion over reinsurance, what kind do they usually decide whether to buy?
FACULTATIVE REINSURANCE. It's like a la carte for risk sharing!
26
Even if underwriters don't have direct involvement with reinsurance, what must they understand?
Their line guides, which indicate the TOTAL RETENTION (net and treaty retention) permitted. Don't go over your limit!
27
What kind of exposures might require FACULTATIVE REINSURANCE?
HAZARDOUS occupancies, risks unprotected by municipal services, CATASTROPHIC loss potential (like earthquakes in BC!), products sold in the US (litigious much?), long-tail liability, and high values. The truly wild risks!
28
How do underwriters establish 'UNDERWRITING CREDIT' with facultative reinsurers?
By sharing a MIX OF RISKS – both attractive and less attractive. It's like proving you're not just bringing them your rotten apples!
29
What happens if an underwriter only submits poor risks to a facultative reinsurer?
The reinsurer will be SUSPICIOUS and wonder 'Why me?' They might even be biased against the risk. Don't be that person!
30
Besides a mix of risks, what else must underwriters demonstrate to facultative reinsurers?
THOROUGH KNOWLEDGE of each risk and its exposures. Reinsurers are like the wise elders, they need to trust your judgment.
31
Why are good relationships with facultative reinsurers useful for underwriters' knowledge?
Reinsurers see a BROADER SPREAD OF RISK, helping underwriters deepen and broaden their market knowledge. They've seen it all!
32
Where are decisions regarding TREATY REINSURANCE almost always made?
In the HEAD OFFICE. It's usually above the branch underwriter's pay grade!
33
What can reinsurers often publish or maintain that's valuable for underwriters?
Newsletters, articles, and websites. Free knowledge, folks!
34
What differing roles can create tension between underwriters and brokers?
Brokers act for the INSURANCE BUYER, finding the best terms, while underwriters act for the INSURANCE COMPANY, acting as a GATEKEEPER for attractive risks. It's a push-pull relationship!
35
Why does it make sense to enhance the relationship between underwriters and brokers?
Because it's MUTUALLY BENEFICIAL. The broker needs a market, the underwriter needs premium income. It's a win-win, if you play nice!
36
What can an underwriter do in an in-person meeting with a broker?
Answer questions about underwriting APPETITE, preferred risks, submissions, applications, workflows, and typical issues. It's like a 'Ask Me Anything' session for insurance!
37
What's the negative implication if the relationship with a broker becomes ADVERSARIAL?
It hurts the underwriter's ability to build TRUST and get the INFORMATION and COOPERATION needed to underwrite properly. Nobody likes a fight when business is on the line.
38
Why is information exchanged more readily in a good professional relationship with a broker?
Because information is the BASIS FOR DECISIONS the underwriter makes. No info, no good decisions!
39
How can underwriters help brokers, which in turn helps themselves?
By guiding them to expect certain questions and information in SUBMISSIONS. It's like training your personal information assistant!
40
How is an AGENT different from a broker, even though both are insurance intermediaries?
An agent represents ONLY ONE INSURER, while a broker can approach several markets. Agents are loyal, brokers are free spirits!
41
What's one way an underwriter's relationship with an employed agent can be more difficult?
Since the agent has no alternative market, the underwriter must be even more SENSITIVE to the agent's interests and circumstances. You're stuck with each other!
42
Why might an underwriter need to collaborate with an employed agent on developing knowledge and skills?
Because the agent is confined to one market and has LESS OPPORTUNITY to learn about other insurers' practices. They might need a little extra schooling!
43
What's a potential challenge when working with independent agents?
They may not fully understand all the PRODUCTS they sell, and they tend to be SMALLER OPERATIONS with limited staff. You might have to do a little more hand-holding.
44
What is PURE RISK EXPOSURE?
What insurance concerns itself with! It's the kind of risk where you can only lose, like your cat suddenly deciding to take up skydiving without a parachute.
45
Who do risk managers represent in negotiations concerning insurance?
The RISK (their employer/organization). They're like the risk's personal bodyguard.
46
How does the sophistication of a risk manager often depend on the size of the organization?
Larger organizations tend to have more SOPHISTICATED risk management programs and, therefore, more sophisticated risk managers. Bigger company, bigger brains!
47
Why is a risk manager a CRITICAL SOURCE OF INFORMATION for an underwriter?
They have IN-DEPTH KNOWLEDGE of the risk's operations, insurance needs, claims management, and loss exposures. They know all the juicy details!
48
True or False: Risk managers are always as well-versed in insurance as insurance professionals.
False! Insurance is only PART of their responsibilities, and the industry is always changing. They rely on brokers and underwriters for the latest intel.
49
What is the broker's critical role when a risk employs a risk manager?
As a LIAISON between the underwriter and the risk manager, mediating tensions and explaining market conditions. They're the peacekeepers!
50
What does the claims department establish to reflect their estimate of what a claim will ultimately cost?
A LOSS RESERVE. It's like putting money aside for a rainy day, but the rain is a giant insurance payout.
51
How can a good relationship with the claims department help an underwriter assess a risk?
It helps them estimate the likely FUTURE DEVELOPMENT OF INCURRED LOSSES, providing a more accurate picture of the risk's loss experience. Seeing into the future, sort of!
52
Besides loss development, what else can the claims department be a source of intelligence for?
Other ASPECTS OF A RISK, like an insured's unwillingness to repay an overpayment (bad moral hazard!). They've got the dirt!
53
How can the claims department be a valuable resource for an underwriter's CONTINUING PROFESSIONAL DEVELOPMENT?
Learning about changes in LEGAL JURISDICTION and new JUDGMENTS that affect future risk assessments. They keep you legally savvy!
54
Why do underwriters find it helpful to discuss policy language interpretation with claims?
Claims people often have the MOST EXPERTISE in it because it's integral to their work in determining coverage. They speak policy-ese fluently!
55
How might an underwriter return the favor to the claims department?
By clarifying the COVERAGE an underwriter intended in agreeing to certain policy language. It's a two-way street of helpfulness!
56
Who does the RATEMAKING that produces the rates underwriters then modify?
ACTUARIES. They're the number-crunching wizards of the insurance world!
57
True or False: Agents and brokers have completely different compensation structures.
False! Both work for COMMISSION, but agents often have a VARIABLE commission scale for renewals. No free rides forever!
58
If an insurer employs its own agents, why can the relationship with an underwriter be trickier?
Because the agent has NO ALTERNATIVE MARKET, so the underwriter has to be extra SENSITIVE to their needs. You're stuck with each other, so make it work!
59
Why might an underwriter need to COLLABORATE with an employed agent on developing their knowledge?
Because the agent is confined to one market and has LESS OPPORTUNITY to learn about other insurers. Think of it as a little professional tutoring session!
60
What's a potential downside of working with INDEPENDENT agents?
They might not FULLY UNDERSTAND all the products they sell, and their operations can be SMALLER with limited staff. Sometimes, a 'jack of all trades' isn't a master of any!
61
What broad discipline seeks to manage PURE RISK exposures?
RISK MANAGEMENT. It's like being a professional risk-avoider, but with more spreadsheets and less bubble wrap.
62
Who do RISK MANAGERS represent in insurance negotiations?
The RISK (their organization/employer). They're the voice of the company's potential problems.
63
What influences a risk manager's SOPHISTICATION?
The SIZE OF THE ORGANIZATION they work for. Bigger company, bigger risk, bigger brain (usually!).
64
What crucial role does the BROKER play when a risk employs a risk manager?
They act as a LIAISON, mediating tensions and explaining market conditions. They're the diplomatic bridge between the underwriter and the risk manager.
65
Who does an insured deal with in the event of a LOSS?
The CLAIMS DEPARTMENT. Underwriters get to avoid the direct fallout, usually!
66
What does the claims department establish for larger or complex losses?
A LOSS RESERVE. It's like setting aside money for a really big, potentially expensive oopsie!
67
How can good relations with the claims department help an underwriter assess a risk's loss experience?
They can help ESTIMATE the future development of incurred losses, giving a more ACCURATE PICTURE. It's like having a crystal ball, but for claims!
68
Beyond loss development, what else can the CLAIMS DEPARTMENT be a source of intelligence for?
Other ASPECTS OF A RISK, like an insured's MORAL HAZARD (e.g., refusing to pay back an overpayment). They've got the scoop on the insured's true colours!
69
What's a practical consequence of an administrative error leading to an overpayment to an insured, from an underwriter's perspective?
It affects the LOSS RATIO, potentially leading to higher PREMIUMS or stricter terms at renewal. Every penny counts!
70
How can the claims department contribute to an underwriter's CONTINUING PROFESSIONAL DEVELOPMENT?
By sharing info on changes in LEGAL JURISDICTION and new JUDGMENTS. Stay sharp, or get sued!
71
Why is discussing POLICY LANGUAGE with claims helpful for underwriters?
Claims people have the MOST EXPERTISE in interpreting policy language. They're the policy dictionary!
72
When might an underwriter RETURN THE FAVOR to the claims department?
When claims needs help CLARIFYING THE COVERAGE an underwriter intended for a specific policy. Teamwork makes the dream work (and the claims get adjusted)!
73
Who is responsible for RATEMAKING?
ACTUARIES. They're the number ninjas who come up with the initial prices for insurance.
74
When might branch-level underwriters interact with actuaries?
On LARGER and more COMPLEX RISKS. The really head-scratching ones that need extra math wizardry.
75
What specific insight can the actuarial department provide on losses?
A MORE DETAILED PICTURE or an additional perspective on LOSS DEVELOPMENT. More data is always better for predicting future mayhem!
76
What are the loss control department often called for the underwriting department?
The EYES AND EARS. They're the on-the-ground intelligence gatherers!
77
What is one of the most important sources of information about a risk for an underwriter?
The REPORT from the LOSS CONTROL INSPECTOR. It's like a detailed health check for the risk.
78
How does a good relationship with loss control benefit the underwriter?
It allows the underwriter to DIRECT the inspector's attention and encourages the inspector to be MORE FORTHCOMING. You get what you ask for (and more!).
79
Why is the loss control department invaluable when underwriters face UNFAMILIAR specialized operations?
Underwriters can LEVERAGE the relationship to learn about the risk and properly assess the EXPOSURE. Ignorance is not bliss in underwriting!
80
What is a WARRANTY in an insurance policy?
A PROMISE by an insured to maintain certain conditions of the risk. Break it, and your policy might vanish like a puff of smoke!
81
What critical aspect of an underwriter's decision involves loss control recommendations?
Deciding which RECOMMENDATIONS or WARRANTY PROVISIONS must be acted on to make the risk ACCEPTABLE. Sometimes you gotta fix it to get covered!
82
How can a loss control inspector help MEDIATE between the underwriter and the risk?
By working closely with management to IMPLEMENT LOSS CONTROL RECOMMENDATIONS. They're the bridge builders of risk improvement!
83
Who is more likely to deal with lawyers directly: claims or underwriting?
The CLAIMS DEPARTMENT. Underwriting usually only gets involved on large commercial accounts or complex claims.
84
What kind of valuable SUPPLEMENTARY underwriting resource can lawyers be?
Understanding how POLICY LANGUAGE has been and would be INTERPRETED BY THE COURTS. They speak fluent 'legalese'!
85
When is a lawyer especially helpful for an underwriter of a large commercial account?
When drafting a MANUSCRIPT WORDING (non-standard policy language). You want to make sure your custom contract holds up in court!
86
What kind of developments can lawyers point underwriters to?
Changes in CASE LAW and NEW/REVISED LEGISLATION. Staying current on laws is key to not making costly mistakes!
87
Besides direct relationships, how can underwriters benefit from lawyers' knowledge?
Lawyers and law firms often publish NEWSLETTERS or maintain WEBSITES with analysis on court cases and emerging legal issues. Free legal insights, score!
88
Why is it important for an underwriter to have good relationships with OTHER INDUSTRY ORGANIZATIONS and experts?
They can be excellent SECONDARY RESOURCES for continuing education, training, and industry knowledge. Think of them as your industry's wise old owls!
89
What does UNDERWRITERS LABORATORIES OF CANADA (ULC) do?
They're an independent, not-for-profit organization that TESTS PRODUCTS for public safety and CERTIFIES them. They're like the safety police, but for products!
90
How might an underwriter benefit from ULC?
By attending product tests (like a pellet stove!) to acquire TECHNICAL KNOWLEDGE and talk to the experts. Hands-on learning, literally!
91
What does the INSURANCE BUREAU OF CANADA (IBC) work on?
They work with governments on the LEGISLATIVE FRAMEWORK for property and casualty insurance. They're the guardians of the rules!
92
What does SCM RISK MANAGEMENT SERVICES provide?
Risk information, loss prevention, commercial inspections, actuarial, and other consulting services. They're like a buffet of risk-related knowledge!
93
How can familiarity with SCM and contact with their staff benefit an underwriter?
It offers access to a REPOSITORY OF INFORMATION about risks, ratemaking, and loss prevention. They've got the data!
94
What is the INSURANCE INSTITUTE OF CANADA (IIC) known for?
Being the PREMIER SOURCE of professional education and career development for the P&C industry in Canada. They're the teachers of the insurance world!
95
Besides courses, what else does the IIC provide?
Demographic research, reports, publications, industry news, and happenings via social media and newsletters like The Pace. They keep you in the loop!
96
What's a valuable, real-time source of information for underwriters that requires careful vetting?
TRUSTED SOCIAL MEDIA PLATFORMS. Just remember to check if it's credible before believing everything you read – unlike your uncle's conspiracy theories!
97
True or False: You always have to pay for services and materials from industry organizations.
True (often)! But personal relationships can sometimes COMPLEMENT those materials. A friendly chat can be priceless!
98
What are some old business sayings about customers?
"The customer is always right" or "The customer is king." (Though, as you'll learn, maybe not always right for an underwriter!)
99
What's a particular challenge for underwriters when it comes to customer focus?
IDENTIFYING THE CUSTOMER, since they serve many. It's like having a revolving door of 'Your Majesties!'
100
Who might an underwriter's 'customer' be in different contexts?
An ADJUSTER from claims, a BROKER, or the RISK MANAGER of a large commercial risk. Basically, anyone who needs your underwriting magic!
101
What must an underwriter bear in mind about their actions on a given account?
That they AFFECT ALL THE CUSTOMERS who have an interest in that account. Ripple effect, baby!
102
How should an underwriter approach decisions to be fair to all customers?
Seek to be FAIR to all, even if it means saying NO to one customer. The 'customer is always right' rule has exceptions!
103
What type of decisions should an underwriter prefer, rather than just justifiable or defensible ones?
Decisions that are SOUND because they are LOGICAL and, above all, FAIR. Think 'Solomon' of insurance!
104
Why is CONSISTENCY in underwriting decisions important?
If underwriters waver, their CREDIBILITY may be called into question by brokers, leading to complaints about COMPETENCY. Don't be unpredictable, or brokers will bail!
105
What agreement guides insurance practice in Canada when multiple policies apply or the law is unclear?
IBC's AGREEMENT OF GUIDING PRINCIPLES. It's like the rulebook for tricky situations!
106
In a loss scenario where both a property and equipment breakdown policy apply due to lightning, what do the guiding principles state?
Each insurer will pay its PROPORTIONATE SHARE of the loss. Sharing is caring, especially when it comes to payouts!
107
What event highlighted the importance of good relations between organizations in the insurance industry?
The SEPTEMBER 11, 2001, TERRORIST ATTACKS. A truly terrible event that brought the industry together.
108
How did the Canadian P&C industry respond to the 9/11 attacks in terms of terrorism coverage?
Many insurers OPTED TO EXCLUDE terrorism coverage and adopted IBC MODEL TERRORISM EXCLUSION WORDINGS. Safety in numbers (and exclusions)!
109
What did the industry's response to 9/11 reflect about inter-organizational relationships?
With GOOD WILL, a balance can be struck between INDIVIDUAL NEEDS and the COMMON need to respond to events affecting the public. It's a team sport against chaos!
110
What recent global event created discussion in the industry about business interruption coverage?
The COVID-19 PANDEMIC. Who knew a tiny virus could cause such big insurance headaches?!
111
What was a key takeaway for insurers from the COVID-19 pandemic regarding business interruption?
The need for GOVERNMENT PARTNERSHIPS to handle future global disasters like pandemics, and to potentially CREATE NEW PRODUCTS. Prepare for the next big disruption!
112
What is a characteristic of 'INSULAR INSURERS'?
They rely heavily on INTERNAL RESOURCES for information and standards, and they discourage interaction with other companies. They live in their own little insurance bubble!
113
Why do other insurers place more value on INTERACTION between their employees and the rest of the industry?
To ascertain information that helps them RESPOND TO CHANGES IN THE MARKETPLACE. Staying connected means staying ahead!
114
What does good relationships between competing organizations allow for?
The EXCHANGE OF MARKET INTELLIGENCE. It's like polite espionage, for the greater good of the industry!
115
What is the business of insurance primarily about?
PEOPLE! Because even computers need someone to decide if that unicycle stunt is insurable.
116
What's PARAMOUNT for an underwriter's day-to-day work?
Having HEALTHY WORKING RELATIONSHIPS with professionals in and around the industry. It's like having a great support network, but for risk.
117
Why should underwriters foster relationships with everyone they contact?
To LEVERAGE those relationships for higher EFFICACY and INFORMATION DISSEMINATION. Basically, getting stuff done better and sharing the juicy details.
118
What qualities should underwriters practice to be considered valuable in their professional relationships?
EMPATHY, UNDERSTANDING, FLEXIBILITY, AND PROFESSIONALISM. Be the awesome colleague everyone wants to work with!
119
How do good underwriting relationships enhance an underwriter's understanding of a risk?
They provide ENOUGH INFORMATION to make a good decision, even if it's not the full picture. Think of it as a helpful jigsaw puzzle piece.
120
Where does the JUDGMENT needed for sound underwriting decisions come from?
EXPERIENCE developed and informed through POSITIVE UNDERWRITING RELATIONSHIPS. Your network helps you level up!
121
What is a KEY COMPONENT of good underwriting relationships?
TRUST. Without it, you're just staring awkwardly at spreadsheets.
122
What is trust built upon in underwriting relationships?
The underwriter's regard for PERSONAL INTEGRITY and the ability to RELY ON THE JUDGMENT OF OTHER PEOPLE. Be a person others can count on!
123
What do successful underwriters ensure by consistently making good decisions through their relationships?
The SOUND INVESTMENT of the insurer's capital and the best chance of realizing the insurer's STRATEGIC OBJECTIVES. They're the guardians of the company's treasure chest!
124
Who is part of a successful underwriter's COOPERATIVE NETWORK?
Brokers, claims adjusters, loss control inspectors, and other underwriters. It's like an Avengers team, but for profitable business!
125
How do successful underwriters achieve their goal of obtaining and retaining profitable business?
By FOSTERING HEALTHY RELATIONSHIPS and working AMICABLY with people. Being nice pays off!
126
What is RISK MANAGEMENT?
A broad discipline that helps identify and deal with PURE RISK EXPOSURES. It's like having a superpower to see problems before they happen!
127
What is a LOSS RESERVE?
Funds set aside by the claims department to estimate the ULTIMATE COST of a claim. It's their best guess at how much that oopsie is gonna cost!
128
What is a WARRANTY in insurance?
A PROMISE by an insured to maintain certain conditions of the risk during the policy term. Break the promise, and your coverage might go poof!
