Fire Insurance Underwriting

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Fire Insurance Underwriting

• The term underwriting is broadly used to denote
• the principles and practices concerning the
  fixing of rates,
• the acceptance or rejection of the risks,
• the total amount of acceptance,
• the amount of retention for insurers own account
  and
• treatment of the balance through reinsurance.
• Factors enter into underwriting
• The production of well spread and large volume of
  
• business
• Selection of the risk
• Limits to be retained
• Reinsurance of surplus

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• Features of risk, influencing the underwriting
  decisions
• The physical nature of the risk
• Construction
• Size of risk
• Processes and occupancy
• Goods-class

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• The probable effects of fire on stocks
• Stock procurement
• Stock susceptibility

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• Fire Protection arrangements
• Fire extinguishing appliances
• Fire brigade facilities
• Sprinkler installations

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• The situation of the risk
• Degree of hazard from adjacent properties
• Geographic locations

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• Retention is arrived with
• Probable maximum loss (PML) for a class of risk
• Maximum amount of loss (MAL) the insurer is
  prepared to incur

Total loss
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• Reinsurance arrangements
• Facultative reinsurance
• Treaty reinsurance

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