How To Get the Best Deal from an Underwriter: Tips for ...

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How an account is submitted to an underwriter can make a differ-ence in the end result of negotiating an insurance program. Ensuringthat the underwriter has detailed information and all of the informa-tion needed to make a decision can facilitate the process. This ses-sion will look at best practices for preparing and presenting an ac-count to underwriters.

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How To Get the Best Deal from an Underwriter:

Tips for Effective Presentation

of an Account

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www.IRMI.com

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How to Get the Best Deal from an Underwriter:

Tips for Effective Presentation of an Account

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• How an account is submitted to an underwriter can make adifference in the end result of negotiating an insurance program.

• Ensuring that the underwriter has detailed information and all of theinformation needed to make a decision can facilitate the process.

• This session will look at best practices for preparing and presentingan account to underwriters.

Tips for Effective Presentation of an Account

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• Understand the roles of the buyer, agent/broker, and underwriter in the process.

• Understand why a good presentation of an account can make a difference.

• Understand best practices for presenting an account to an underwriter.

Learning Objectives

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• First and foremost – providing adequate coverage for your client • Accurate and competitive pricing• Timely quote• Less chance of a declination• Prevention of duplicated submissions• Good working relationship with your underwriters

Which all add up to “Ease of doing business”!

Why a good presentation of an account can make a difference

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All involved in the insurance transaction:

The Insured – The insured will have a financial interest in the property and/or operation that is being submitted for insurance coverage. The insured will benefit from the purchase of an insurance policy in the event of a covered loss.

The Agent – Advisor to the insured as to their insurance needs; provides information to the underwriter and facilitates placement of insurance.

The Underwriter - Carrier representative; reviews and determines acceptance of application for insurance and pricing.

The Insured, the Agent, and the Underwriter

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• Application is completed by the agent and submitted to carrier(s) for review for acceptance.

• Carrier underwriter reviews the application for acceptance or declination per the program/underwriting guidelines.

• If acceptable, then underwriter will price the account based upon the information in the application and will present a quote to the agent to review with the client.

• If the coverage and price are acceptable to the client, the agent will request the carrier to bind coverage and issue a policy.

The Process

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Financial stability (rating) of the carrier• Concern not only for the insured but also the agency• Acceptable to parties involved – mortgagee, additional insureds

Dedicated program• Do they specialize – pricing and/or coverages• Risk appetite

Loss control services• Inspections• Specialized pricing on risk management services or products

Consideration on which carrier(s) to submit an application

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• Customer service• Timeliness of the renewal, endorsements, etc.• Billing options

• What may be the most important consideration

• Working relationship with the underwriter and the underwriting team

Consideration on which carrier(s) to submit an application (cont’d)

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Have a conversation with your underwriter prior to submitting.• Improves the working relationship

• Better understanding of program guidelines

• If there are known issues with the account, a phone call or email to your underwriter may help identify which carriers are going to review the risk and which will decline.• Unusual Operations• Loss History• Prior cancellation/non-renewal or lapse in coverage• Already received the submission from another agent

Communication can make a difference

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Applications should be submitted to the carrier at least 60 days prior to the effective date of insurance.

• Carrier may require 60-90 days prior if the account is large (property schedule) or unusual/difficult exposures (liability).

• Onsite inspections – surveys or loss control inspections.• Last minute submissions are difficult to underwrite and price.

Carriers may have restrictions on how far in advance an account can be submitted.

• Generally 120 days in advance is the maximum.

Timing of a Submission

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Once an application is submitted to a carrier, then the carrier is reserved for that specific client/agent for quote.

• If another agent submits the same risk after, it should be declined for the reason of “prior submission.”

• However, there have been issues with reserving of market due to multiple named insureds, online quoting, submitted to a different underwriter or underwriting department.

Timing of a Submission (cont’d)

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Cover letter or brief synopsis of the risk• areas of concern – losses, operations, buildings, etc.• areas where risk is above average.

Complete and updated application • Effective/expiration date • May need to consider a carrier’s specific application vs Acord• Submit online or by email• Direct to the underwriter or a general submissions email address

What should be included in a submission?

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Financial information if required by the carrier• Maybe required based on the type of size of account

Loss Runs• 3-5 years • All prior carrier(s) • Currently valued

Photos and diagrams• Include all dwellings and buildings (insured and uninsured)• Include building dimensions and distance between structures

What should be included in a submission? (cont’d)

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• Target Price

• Target Need by Date

What should be included in a submission? (cont’d)

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First three things an underwriter will review when an application is submitted:

• Named Insured • Complete• Prior submission; current term or prior year(s)• Well-known account

• Operations• Match the Named Insured(s)• Fit within their underwriting program

• Loss History• Prior carrier(s) loss history (3-5 years)• Poor loss experience• Lack of loss information

The Big Three (in any order)

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Why the Named Insured, Operations, or Loss Information?

Because 9 times out of 10, it will be the reason for a declination.

Underwriters do not look for reasons to decline, but with limited desk time or experience, they may need to decide on the acceptability of an account quickly.

If an issue with the Named Insured, Operations or Losses, and a conversation has not happened, chances are the underwriter will decline and move on to the next submission.

The Big Three – cont’d

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What can cause the delay or poorly priced quote, possibly a decline? • Named Insured is incomplete -

• Farm accounts can include multiple families or entities. A lengthy named insured schedule without a brief explanation of each named insured’s interest/operation may cause delay as the underwriter must understand who is to be an insured and if they are to include or exclude specific operations (farm or commercial).

Example Name (First Named Insured and Other Named Insureds)

Joe Brown and Josephina BrownJoe Brown Jr. and Melissa SmithAgribusiness Direct

Will this delay your quote? Cause concerns for reserving the market?

Application Concerns – The first 2 pages

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Entity Type – missing or incorrect. • Named insured schedule shows an individual name but the entity

indicates corporation.

Example:Named insured: Joe Brown and Josephina Brown

Application Concerns – The first 2 pages (cont’d)

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Type of Farm/Ranch not indicated on the app (left blank) or the description of operation states:

Farm

Ranch

Owned

Leased

Might not cause the account to be declined, but may cause a delay or concern that the remainder of the app may not be complete.

Describe in general terms unless it is an unusual risk or outside the standard definition of type.

Application Concerns – The first 2 pages (cont’d)

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Loss History (remember the Big 3)• If you have prior carrier loss runs – refer to them; or • Input information on the application • If there is a severe loss or a frequency of losses, address along with the

submission or prior. Call the underwriter to discuss.• Prefer 3-5 years of experience• Do not leave blank

Why are loss runs so important? • Determines if coverage can be written• Can assist in the pricing of an account – Schedule rating, IRPM

Application Concerns – The first 2 pages (cont’d)

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Complete location schedule • Out of sequence or skipped numbering of locations can cause confusion

• If done, please make sure the location numbers match the property/liability apps

• Acreage for each location (if applicable)

• If property at the location, then underwriting will require a physical address

• If no property at the location, APN may be acceptable

• Out of state locations – indicate state

Application Concerns – The first 2 pages (cont’d)

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There are 5 “General Information” questions and 29 “General Information – Liability Only” question on the Agri Acord App.

• Underwriters look for all questions to be answered.

• If they do not apply, still answer or explain which questions are NA.

Don’t assume the underwriter is going to understand no livestock exposure if the operation is described as an orchard.

Application Concerns – The first 2 pages (cont’d)

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As you can see, just the first 2 pages of the application can have a big impact on the workload for an underwriter and provides a first glimpse of the risk. This will determine if the account will or will not receive the proper review, coverage, and pricing it deserves.

If a phone call to the underwriter is not feasible, then a well-drafted cover letter, email, note, etc. can take its place. Underwriters are information-driven and must document every nuance of a risk, especially if it’s something outside the box or a deviation from the filed rate.

Let’s take a look at the remainder of the application/submission.

Application Concerns – The first 2 pages (cont’d)

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The key to a complete property application is updated and accurate information. Granted a Google search could provide some information, but is it information that will reflect poorly or maybe cause additional questions and a delay in the process.

Take into consideration a risk that was on the MLS for sale in 2013. A quick search of the address in Google could bring up the listing and photos. And what if those photos show a property that was sold “as is” and in dire need of refurbishing. Maybe your insured purchased the property and in the 3 years since, completed all of the updating resulting in a updated property.

A great reason the underwriter should be made aware of before the Google search or in lieu of the search. If no or incomplete information, the underwriter may search Google. If the underwriter has the updated information in hand, then think how quickly the review, quote, and proposal can be completed.

Property Application

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What can be done to get the best Property quote?

Property Location • Match the schedule of locations ensures the correct address

• Correct territory rates • Correct protection class (if applicable)

Year built• Most carriers consider year built to be the original construction year• If there have been updates, provide details including dates

• i.e., systems (plumbing, electrical, etc.); roof refurbishment/updating• New construction credit (usually less than 5 years new)

Property Application

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What can be done to get the best Property quote? cont’d

Construction

• Agency mgmt. systems may have “frame” as the default. By correcting the construction for a building/dwelling that is masonry or fire resistive construction may qualify for a reduced property rate.

• Blank construction field will generally result in the frame property rate which could be a higher rate.

Property Application

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What can be done to get the best Property quote? (cont’d)

Occupancy/Intended Use - Property rates are reflective of their occupancy/use• Property description of “Building” or left blank is difficult to underwrite/class/price. • Structure that is no longer used as it’s original intended use:

• Consider a dairy barn that is now being used as a storage barn. Advising the underwriter of the use will ensure the property rate is reflective of the building characteristics but also the current use. Consideration can also be given to the valuation of the property.

Square Footage • Used to determine if the building/dwelling has adequate ITV (insurance to value).• Consideration for over or under-insured property and loss valuation options. • Google Earth has a ruler option to measure.

Property Application

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What can be done to get the best Property quote? (cont’d)

Photos• Visual representation of the property, current is best.• Again, we don’t want to rely on RE listing photos – may not be accurate for current

condition.• Document updates to the property.• Clearance of vegetation surrounding the property.

Diagrams – this is most helpful when• Multiple structures at a location and insured has decided to not insure all.• Multiple structures of the same with different limits of insurance. • Distance between structures; assist in the determination of PML.

Property Application

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Property Limits – who gets to decide how much and why?The limit of insurance is probably one of the most important considerations when determining coverage. There is no easy answer to the question of “how much is enough to repair or replace?” There are tools that assist in determining the replacement value (Marshal & Swift) but who completes to determine the limit?

This should be determined between the agent and the insured – not the underwriter. Underwriters will review the limit to determine if the property is severely underinsured or overinsured, but never should they determine the property limit of insurance.

Property Application

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Liability applications are minimal but need to be as descriptive as possible to reflect all exposures/operations – farm, commercial, and personal. Review of the insured’s operations on a regular basis and advising the insured to notify of a change in operation is key.

Google search can also comes into play with liability exposures. A google search of the named insured returns an agritainment operation that was not indicated on the liability application. Cause for concern? Yes, now the underwriter is reviewing an incomplete application which can create multiple questions and a concern for any additional operations that are unknown.

This will definitely stop the quote process and/or cause for a decline.

Liability Application

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What can be done to get the best Liability quote?Limits

• In addition to the Occurrence and Aggregate limits. Leaving the Medical or Fire Legal limits blank can cause questions. Or asking for Fire Legal limits above what the specific carrier includes in their program. An explanation of why the additional limits may be requested.

Acreage totals do not match the schedule of locations• Underwriters do understand that locations are bought and sold regularly, causing changes

not only in the Schedule of Locations (prior discussion) but also in the total acreage. However, farm liability is rated based on the total acreage. If there is a discrepancy between the acreage totals from the Schedule of Locations and the Liability application, this may cause the quote to be delayed while the waiting for clarification, or worse, the quote proposal is incorrect.

Liability Application

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What can be done to get the best Liability quote? (cont’d)

Other than standard farming operation class codes indicated on the application without explanation.• Food processing without explanation and exposure basis• Multiple lessor’s risk dwelling exposures without indication of

property coverage

Liability Application

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What can be done to get the best Liability quote? (cont’d)

Custom Farming• Custom farming (incidental) is included in the standard farm liability

form (up to $10,000 in receipts). If receipts greater than $10,000 are shown on the app, underwriters need an explanation • Type of operation(s) performing for others? • What is their radius? • If the exposures is great, then possibly what equipment is used as some

carriers have filed rates specifically for machinery and equipment used for custom farming.

• Primary operation vs their farming for themselves

Liability Application

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What can be done to get the best Liability quote? (cont’d)

Farm Management • No incidental coverage, but the requirement for information is similar to

the Custom Farming information.

Liability Acord application questions • This is a repeat from prior discussion• Answer all questions even if they don’t apply. Or if left blank, advise that

they are NA.

Liability Application

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A great way to offer a complete and competitive quote, is to include the auto with the farm package.

Consideration should be made for the following to determine if the auto should be included:

• Will the carrier combine the auto with the farm or write a separate auto policy?

• Is there a different underwriter and/or department? • Will they combine farm (commercial class) and personal vehicles

under one policy. • If it can be included with the farm policy, named insured

complications.

Auto Application

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What can be done to get the best Auto quote?

• Limits • Complete all applicable coverage limit selections• Be sure to consider any out of state exposures• Motor Carrier requirements

• Symbols• Symbol 1 is preferred as it provides the broadest of coverage symbols. Based on

the definition of symbol 1 (any auto) underwriting must confirm that “all owned autos” of “all named insureds” are included on the application for quote.

• Remaining coverage symbols are indicated

Auto Application

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What can be done to get the best Auto quote? (cont’d)

• Complete Driver list and information• First and Last name• Drivers license number and State of issuance• Date of birth• If less than 5 years driving experience – indicate which vehicle is their

primary• Need to consider driving experience in lieu of age. For example AB60 in California

now allows undocumented residents to obtain a valid drivers license. Or a driver who may not have obtained a license at 16, but waited until a later age.

• If there are vehicles on the application that require a commercial license to drive, need to have a scheduled driver with the required license.

Auto Application

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What can be done to get the best Auto quote? (cont’d)

• Comp/collision deductibles • Left blank will result in no coverage• Indicate if the insured would like deductible options

• Complete VINs on the auto schedule• Some carrier systems will input the vehicle information based on a

complete VIN, including the cost new• Cost New

• Rating plans are based on the Cost New for a vehicle• If antique, classic or special type of vehicle; and the insured wishes to

insure for physical damage• Supporting information when determining the Stated Amount

Auto Application

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You’ve made it thru all the primary applications, don’t give up now!

Umbrella/Excess applications should always be submitted for quote and always presented in your quote proposal to the insured. If they decline, then document the file.

With that being said, umbrella applications are usually an afterthought and normally incomplete. This can be frustrating from all involved, you’ve worked thru all the primary coverages just to be stopped before the finish line. With a complete umbrella/excess quote, your proposal just might be the winner –complete and competitive!• Limits • Work Comp/Employer’s Liab policy info (limits, dates)• Other policies

Umbrella/Excess Application

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What can be done to get the best Umbrella/Excess quote?

Named Insured(s)• Consider your underlying policies. Do they have different named

insured schedules?

Limits • Policy Limit; consideration as to how the limit was selected• Underlying policy limits are needed to ensure they meet the

requirements

Umbrella/Excess Application

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What can be done to get the best Umbrella/Excess quote? (cont’d)

Work Comp/Employers Liability policy info • Current carrier, policy limits and term dates

• Other policies• Consider if the carrier can include underlying policies written elsewhere

• Specialty Auto, Motorcycle, etc• Liability for property (Fair Plans)

Umbrella/Excess Application

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Why would you want to present the best application possible?

What is represented on the application is what the underwriter will use to not only determine acceptability and coverage, but also price.

Price is one of the most important factors when and insured is making a decision on purchasing insurance and with whom. When a producer is presenting a quote, they want to make certain that they are offering the carrier’s best quote –

Coverage and Price

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Questions??

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