Since the first days of Edward Lloyd, when merchant venturers started to “underwrite” each others’ voyages, underwriting has been at the heart of the insurance business.

“Intelligent risk taking” is the essence of underwriting: knowing what risks you want to take, or can take on, and knowing how much to charge: “there is no such thing as bad risk, only a bad price”.

In our unique industry, we don’t know the product cost when we sell the product, so the language of underwriting is very much the language of insurance.

This “fundamentals” course is not really designed for underwriters at the start of their professional career but for professionals in other functions whose role brings them into contact with, and requires them to understand, this vital part of the insurance process.

Whether your role is in Claims, Compliance, HR or Finance you’ll probably want to understand:

• What is involved?
• What decisions are made?
• What will influence those decisions?
• What skills and knowledge are required?
• What does success look like and what are the risks?

The Course Agenda

The underwriting process

• Revising the link between capital and underwriting capacity: the insurance cycle
• Accepting the risk
• Delegating underwriting authority
• Setting and monitoring claims reserves

Key functions of the underwriter

• Assessing the risks being presented
• Deciding whether to accept the risk
• Determining policy terms and conditions
• Calculating an achieving an appropriate premium

Factors to be considered within risk evaluation

• The factors that determine
  • Are you allowed to write the risk?
  • Do you want to write the risk?
  • How much risk can you accept?
  • How much you will charge?
• Exposure management and re-insurance

The two main pricing techniques

• Experience v exposure rating
• Negotiating the price

What should be covered within the insurance contract: the policy

• Revising the insurance principles
• Elements of an insurance contract
• The language of terms and conditions
• Complying with legislation: Consumer Insurance Act 2012, Insurance Act 2015

The principles of setting and maintaining adequate claims reserves

• Claims paid, claims outstanding, IBNR, prior year reserve release and IBNER

The concept of portfolio management

• Cross class considerations

The underwriting control environment

• Competences?
• Underwriting procedures
• Regulation and compliance

How the practice of underwriting might be changing

• From aggregator websites to insuretech algorithms