Mataracy
VIP Contributor
The factor that guide the underwriter in assessing a risk are :
(i) Hazards associated with the risk
Hazard has been treated extensively in the earlier course (introduction to insurance) but for the purpose of clarity, I shall link hazard with underwriting here
Hazard is defined as features that will influence or increase the occurrence and severity of a loss. It is divided into two: physical and moral hazards. Physical hazard relate to physical or tangible aspects of the occurrence and event of a loss. These are aspects of the risk likely to cause an insured event to take place , what aspects of the risk are likely to make it a serious loss rather than minor?
The moral hazard is concerned with the attitudes and conduct of the insured.
(ii) The conduct of the insured's personal representative or employee.
This could also be discussed under hazard but since the insure is different from his personal representative or employees, the conduct of these people will also influence the judgment of a prudent underwriter.
(iii)Social Factor
The syndrome of getting rich quick irrespective of the means and methods has really changed the perception of underwriters.we have seen cashiers dashing a way with company's money, fraudulent people setting public buildings ablaze in order to cover their nefarious activities and so on .This factor is also considered by the underwriter.
(iv) Experience of Underwriter
People say"experience is the best teacher". Undewriters also bank on experience gathered on a particular class of business to calculate the probability of loss occurrence.
(i) Hazards associated with the risk
Hazard has been treated extensively in the earlier course (introduction to insurance) but for the purpose of clarity, I shall link hazard with underwriting here
Hazard is defined as features that will influence or increase the occurrence and severity of a loss. It is divided into two: physical and moral hazards. Physical hazard relate to physical or tangible aspects of the occurrence and event of a loss. These are aspects of the risk likely to cause an insured event to take place , what aspects of the risk are likely to make it a serious loss rather than minor?
The moral hazard is concerned with the attitudes and conduct of the insured.
(ii) The conduct of the insured's personal representative or employee.
This could also be discussed under hazard but since the insure is different from his personal representative or employees, the conduct of these people will also influence the judgment of a prudent underwriter.
(iii)Social Factor
The syndrome of getting rich quick irrespective of the means and methods has really changed the perception of underwriters.we have seen cashiers dashing a way with company's money, fraudulent people setting public buildings ablaze in order to cover their nefarious activities and so on .This factor is also considered by the underwriter.
(iv) Experience of Underwriter
People say"experience is the best teacher". Undewriters also bank on experience gathered on a particular class of business to calculate the probability of loss occurrence.
