Undoubtedly, there are many parameters that the insurer uses when it is going to underwrite the risk represented by insuring a certain driver. We address some of these parameters below.
1.
Deductible or
excess
Deductible or
excess are the same, the dictionary meaning may be slightly different, but the
overall purpose in insurance is one and the same. Most of the insurers use it
synonymously. The underwriter will impose a minimum compulsory deductible under
the policy known as mandatory excess. However, the insured does not have the
choice to reduce the compulsory excess but does have an option to increase the
excess and get a discount in the rates from the insured. If the insured is a
good driver and feels that he may not be able to have accidents, then he will
increase the excess in the hope of getting the discount in the premium rate.
This kind of driver is commonly well-received by Direct Auto
Insurance providers.
The deductible
opted by the insured is known as the voluntary deductible. The underwriter will
have a twin benefit if the insured is opting for the voluntary deductible. He
will save the claims cost and the claims administration costs. This will allow
him to make the discount to the insured. Thus, this will help both the insured
and the insurance company in reducing the costs.
How does de deductible work?
For example, in
the above case if Mr. X wants to insure his car then the insurer will offer him
a deductible of $ 500 each and every claim. This deductible is compulsory and
the insured cannot get a deductible less than $ 500. However, if Mr. X is a
safe driver and he would like to avail of some benefits then he can go in for a
reduction in premium by increasing the deductible. Suppose he would like to
volunteer for a higher deductible of $1,500. Then he may get a discount in
rating, usually, the underwriter is willing to reduce the premium by half a
percent. The rating for the risk will be revised from 4% to 3.5%. Mr. X will be
paying a premium of $ 3,500 for going for a higher voluntary deductible of $
1,500.
2.
Safety
measures
Technological
advances have helped in building features in the vehicles that will protect the
passengers and also the vehicle from accidental damages and thefts. Vehicle
technology has helped the insurers track the running of the vehicle, it has
also given the insured the navigational tools and other features like sensors
to avoid the accident to the vehicle. The features like air-bags, seat belts,
and the strong body of the vehicle help in protecting the driver and the
passengers. Other features like designing of the vehicle so as to make it more
stable on the road and in case of an accident.
The built-in
cameras and sensors help in avoiding minor as well as major accidents. A theft
alarm and steering wheel lock will help in preventing losses due to theft. The
insurance industry is hopeful of many new features being brought into the
vehicle to avoid accidents and to reduce losses. The underwriter needs to
consider these features while underwriting a vehicle risk. Under fleet
insurance, the underwriter should take into consideration the fleet safety
program. By installing proper safety features, it will be easier for you to
find affordable coverage plans. You get insurance now pay later, in addition to getting supplemental insurance with companies like Aflac car insurance.
A fleet safety
program should have the right processes and procedures to help improve safety
and reduce costs. All the stakeholders should be involved in the process. The
Insurance company representative can also become a part of the fleet safety
program. The underwriter will discount the standard rates in case the insured
has safety features in his risk.
3.
Pre-Risk
surveys
Pre-risk
surveys one of the important elements of underwriting. In most of the
individual or personal lines risks or small commercial risks, the pre-risk
surveys are recommended to avoid fraud and make sure that the risk is acceptable.
It is almost essential in the case of high-risk groups like hazardous tankers,
haulage trucks or chemical carrying vehicles, etc. The pre-risk survey can be
done by the in-house representative or can be outsourced to a third-party loss
adjuster or surveyor.
The in-house
surveys are done by the salesman of the insurance company or the underwriter or
one of their claims staff. However, in the case of the commercial fleet, the
outside surveyor is used. The outside surveyor is a professional who will be
able to provide the full-scale details of the risk being insured. The main
purpose of the pre-risk surveys is to obtain the full description of the risk
being insured and assess the physical and other hazards of the risk.
It will also
help in understanding the correctness of the proposal form. A professional
pre-risk survey especially related to a commercial risk will also suggest risk
improvement and loss prevention measures. The outside agency will provide the
photographs of the risk along with the pre-risk survey report.