Chapter 8 - C 120

Terms	Definitions
Why is an underwriting decision better and more effective if it is acceptable to the other professionals working for the insurer?	negotiation is done between people. must have a mutual interest in the strength of the relationship between them.
What other professionals might an underwriter work with?	other underwriters, reinsurers, brokers, agents, risks managers, claims department, actuarial department, loss control department, lawyers, industry organizations, customers.
Explain the "shades of grey" that characterize most risks. What do "shades of grey" have to do with the art of underwriting?	the variables between the best risk and the worst one.
What is networking? Why is it beneficial to an underwriter?	the more professional relationships one has, the better the underwriter can undertake the many small transactions between people that make any business run smoothly and well.
When might an underwriter need facultative reinsurance? Give an example.	for unique or especially hazardous exposures. i.e. hazardous occupancies such as chemical manufacturing or furniture making.
Why is it important for an underwriter to establish underwriting credit?	the underwriter must share a mix of risks with facultative reinsurers to help build up their portfolio. by acting this way, the reinsurer will not be suspicious that they are only receiving poor risks.
Why is it important for an underwriter to understand the purpose and general structure of treaties?	will help the underwriter recognize that facultative and treaty reinsurance are related.
How are the roles of an underwriter and a broker different?	a broker is looking out for the best interest of the consumer whereas the underwriter is looking out for the best interest of the insurer.
What difficulties might a newer underwriter have when exchanging information with a broker?	a new underwriter may regard a broker in a "us vs. them" mentality leading to an adversarial relationship.
Explain why and how an underwriter can "improve the source."	the underwriter recognizing the importance of the broker for new business will take the time to help the broker by leading him/her to expect that certain questions will always need answers.
How is the role of an agent different from that of a broker?	the agent is mostly responsible for selling new policies instead of servicing current ones whereas a broker is responsible for all aspects of new business and renewal.
How is the commission earned by an agent different from the commission earned by a broker?	brokers tend to receive the same commissions for new business and renewals whereas agents have more importance on new business.
What is the difference between speculative risk and pure risk?	In pure risk there is a chance of loss whereas speculative risk there is a chance for a gain or loss.
What is risk management? What are risk managers responsible for?	it is the process which allows insurance and risk management professionals to systematically identify and deal with risk exposures.
What is the role of an actuary?	they are responsible for creating the ratemaking that underwriters use.
What is the role of the loss-control department?	they inspect risks and create the loss control report that underwriters use.
Explain how identifying an underwriter's customers depends on context.	an underwriter should consider all the people he deals with as customers and behave accordingly.
What is the function of IBC's Agreement of Guiding Principles?	it guides the insurance practice concerning multiple insurance policies where they depart from statutory specifications, where the law is unclear, gaps exist in the law or in unusual or disputed circumstances
What is the importance of goodwill between competing companies?	a balance can be struck between individual needs and their common need to respond to circumstances that affect them all and the public. i.e. September 11.