Risk Sampling for Underwriting Facilities

Risk Sampling for Underwriting Facilities

One of the challenges with managing binders and underwriting facilities for small/medium risks is that underwriting performance assessment can be limited to premium vs claims.

With premium value per insured unable to support the cost of a survey, traditionally a binder is left alone until the claims make the binder uneconomical to continue with and it is closed down, throwing out all good business with the ‘few bad apples’

Equally when Underwriters are looking to be more selective about their use of capacity it can be difficult to differentiate between facilities that are good quality and can carry an increase in rate rather than inherently poor quality.

To address this we can provide Underwriters and Coverholders with a cost effective integrated “risk sampling” programme allowing proactive account cover management rather than responding to Loss Ratio performance.

By risk sampling against pre-agreed criteria both Underwriters and Coverholders benefit from greater understanding or risk quality and issues that can impact on the facility longevity.

We can then deliver Underwriting MI based on the risk criteria that can then be correlated with profitability data and claims trends.

The cost can be based on a % of the Cover GWP depending on the sample size, reporting requirements and hazard level of the facility so it can be factored in to commercial negotiations. Cost can also be calculated based on time spent or level of Sums Insured.