What Is Your Underwriter Looking For?

To long-term risk managers, yourinsurance underwriter is almosta member of the team, butmany small business owners

remain confused about the role of anunderwriter. And long-term managers pleasenote: Even you may need a refresher course intoday’s underwriter and how he or she impactsyour organization

Here’s a primer on the important role this valuableperson plays.

Underwriters hold the key to insuring your businessor organization. The underwriter is the person atthe insurance company who makes the decision toaccept a certain risk and at what price, as allinsurance companies are in the business oftransferring risk for a fee. All the questions they askabout you or your company help them make thatdecision.

Here are some questions they may ask:

• How long has your business been in operation?Underwriters like to see three full years ofoperation. If your business is new, it will beharder for the carrier to insure your business atthe best rate.

• Is your business financially sound? For example, ifyou own investment properties and you are“upside down” on several of them, underwritersmay decline your account. Prior cancellations fornonpayment of premiums will hurt your riskprofile as well.

• If you have a vehicle fleet or commercialbuildings, are they in good condition, cleanand outfitted with adequate safety measures?Are your vehicles in a secure location whennot in use?

• Where is your business located? The safety ofneighborhoods is a prime concern, not just foryou but for your insurance carrier.

• What is your loss history in the past three to fiveyears? Most underwriters anticipate a better-than-average loss history. You can explain someoutliers, but standard insurance carriers willhesitate if your business has an unfavorable losshistory.

• Do you, as owner of the business, activelymanage the operation on a daily basis? If so, youare demonstrating that you have control of theoperations of the company.

• What loss prevention programs are in place? Doyou have a safety manual, and do you conductfrequent safety meetings? For workers’compensation insurance, many underwritersrequire a return-to-work program that bringsinjured workers back to work temporarily after aninjury.

• Does your organization have a drug and alcoholpolicy? Is it enforced? Do you prescreenemployees for criminal and driving records?

• Are vehicles available for personal use? Howmany drivers do you have under the age of25?

• Is your insurance application filled outcompletely and neatly? A sloppy applicationmay indicate a lack of attention to detail.Especially when purchasing professionalliability coverage, this can immediately sourthe underwriter.

Prior to binding coverage,underwriters will review your lossruns, request inspections andcheck insurance claims

databases. Most insurers validate and cross-checkinformation on your application. Your honesty andhow you interact with the carrier in the initialstages of the underwriting process can mean thedifference between that carrier accepting orrejecting your business.

Randy Bettwww.BetterGroupRealEstate.ca