C121 Advanced Underwriting Chapter 1 Needs Analysis Introduction Underwriter: insurance professionals who invest the capital of an insurers

s shareholders by accepting or rejecting risk implementing an insurers strategic plan.

The Typical Risk No such thing as a typical risk Different exposures Different levels of exposure Cross border Small and large

Underwriting Skills Technical Skills: tools of trade- rating and ratemaking, computer skills, researchskill, knowledge of insurance products, loss control, and reinsurance. Analytical Skills: information must be sifted, ordered, weighted. Includesfinancial analysis and risk analysis. Communication Skills: orally and in writing. Negotiations Organizational Skills: time management and be able to prioritize

Rating and Ratemaking Skills 1. Rating: the process that underwriters use when they apply the informationdeveloped by actuaries to the information that has been gathered about the risk toset a premium for a specific risk. Two approaches: Class rating: is used when statistics can be gathered on a large number of risks that share common characteristics. o Same basic risk factors re either present or absent o I.e. auto insurance o Allows for statistical measurement of the claims experience for each risk factor Schedule rating: available statistical data are too fragmented for class rating. o I.e. commercial property Loadings: additional charges Deductions: credits

2.

Actuaries Loss development factors (LDFs), to be applied to a risks past claims to project final cost of settling them o Tool for projecting future loss ratio and the premium needed to make risk profitable. o Also consider inflation, types of loss, changes in risk