Chapter 9 - C 120

Terms	Definitions
What is the most obvious way in which an underwriter can adapt to his or her company's internal environment?	It is to follow the policies and guidelines established by their employers to do their work.
What is one danger of the centralized approach to underwriting?	Accountability without authority. Underwriters are generally accountable for the premium volume and profitability of their assigned shares yet may be denied the authority to meet quotas due to the centralized approach to underwriting decisions.
How does a decentralized insurer differ from a centralized insurer?	The decentralized insurer gives much more latitude to the underwriter and its line guide may be less detailed than those of centralized insurers. There is more of a emphasis for the underwriter to acquire new business.
What is one danger of the decentralized approach to underwriting?	Too little direction or supervision may result in many approaches to assessing risk and setting terms as there are underwriters working for the insurer.
How can company mergers affect underwriting?	A clash of corporate culture could result in unclear underwriting rules and expectations.
How has technology changed the information available to an underwriter? Give an example of a source of information that an underwriter might find useful.	It has given underwriters access to information from around the world. The internet allows underwriters to have contact with other underwriters anywhere in the world and exchange information about risks, hazards exposures etc.
How can too much information negatively affect an underwriter's ability to make a decision?	It could lead underwriters short on time to selectively or skim information and base a decision on a misleading understanding.
Why is it important for an underwriter to understand the relationship between the Canadian insurance industry and practices and the insurance industry and practices in other parts of the world?	The global makes it character of the insurance industry makes it important for underwriters understand the relationship of their Canadian industry and practices to the industry and practices of other parts of the world.
How is Canadian society becoming more like that of the United States with regard to litigation?	Many hazards where insurers were not liable in the past are being brought to litigation. E.g. sexual abuse in religious institutions, government lawsuits etc.
Why is the aging of Canada's population relevant to an underwriter?	Underwriters may expect to see more submissions for insurance on nursing homes and related risks that will become more important as the population ages.
Why should an underwriter consider environmental contamination when evaluating the exposure to risk?	Canadians today are more environmentally conscious than they were a generation ago, more concerned about the potentially harmful effects of new products and services on the environment. E.g. CFCs and freezer coolants. Insurance on such things could lead to loss experiences for insurers.
Why should an underwriter write every note with care?	An underwriter should be careful that nothing is written about an account that might embarrass or undermine the insurer should the files ever have to be produced in court.
How have privacy concerns affected underwriting networks?	Underwriters will have to be more discreet about the informal networks they have traditionally used to exchange information amongst themselves about their underwriting restrictions and policies and approaches to rating.
What are judicial trends? Why should underwriters pay attention to judicial trends?	Judicial trends are court decisions that could help determine exposures and the cost to insure them.
How does the state of the economy affect the insurance market?	A good economy could lead to an increase in mergers and acquisitions which affects rates. The state of the economy also affects the prevalence of hazards.
Why do insurers often find that the frequency of claims increases in difficult economic times?	In a difficult economic cycle, personal and business bankruptcies increase which leads to an increase in the frequency of claims .
How does the state of the economy affect an insured's maintenance and housekeeping?	In a poor economy, a business may cut costs and consider maintenance and housekeeping as discretionary in which expenses can be reduced or eliminated until the economy improves. In a booming economy, a business may have no down time to allocate to maintenance or housekeeping.
How does the global economy affect the insurance industry?	The global economy greatly affects the Canadian economy which in turn affects the Canadian insurance industry.
How do laws and regulations shape the environment in which underwriters work?	Laws and regulations shape society in which we live and the environment in which underwriters work.
How has the increase in public concern about pollution changed legislation? Why do the changes concern underwriters?	The increasing number and severity of pollution incidents such as oil spills have led to increasing public concern about pollution. This has led to extensive statutes and the emergence of environmental regulation. Legislation now play an important role in environmental liability litigation and is therefore an important consideration for underwriters.