By Megan Stephens, Underwriter
When an insured receives a quote, one of the first items they review is the subjectivities. The list of required subjectivities can be intimidating, but carriers have reasons for requesting this information. Understanding the purpose of each of them can help an agent explain the importance to an insured.
Qualifications are used by the carrier to make sure an insured is experienced to do the operations/services the carrier is covering. Qualifications can be anything from resumes, statement of the insured’s qualifications (SOQ), training certificates, or a company brochure. All of these items are seen as positives to a carrier because they show an insured’s knowledge about the operations and services they are insuring.
Financials are requested by a carrier to examine an insured’s stability. In the event of a claim, the carrier wants to make sure the insured is able to pay the deductible. Many package/pollution policies are based on an insured’s estimated exposure (revenues) for the upcoming year; if an insured’s gross revenues fluctuate by a large amount, then financials are reviewed to make sure this information is accurate and to review positive or negative trends.
Loss Runs and Expiring Coverage
If an insured has had prior coverage, then an underwriter will typically ask for loss runs and evidence of expiring coverage. The loss runs are used to review an insuredâ€™s past losses, which gives the carrier a look at the insured’s history and the opportunity to make sure changes were made after a big claim. These changes can be as simple as implementing a new procedure so the same loss does not occur again. A carrier may also request copies of the insured’s expiring policy. This subjectivity is to ensure the carrier properly matches coverage and honors any prior retroactive dates to prevent gaps in coverage. This information can typically be found on the insured’s expiring declarations page and expiring claims made endorsements.
Health & Safety Plan
If an insured has a Health and Safety Plan in place, a carrier may request a copy of the table of contents from this plan. This acts as proof of the plan and ensures that an insured has procedures in place to prevent losses. Accidents happen and this is why many insureds carry coverage, but these plans often help prevent frequency of mishaps.
Although many carriers are able to offer an indication based on an alternative carrier’s application, they often require their own application be completed prior to binding. Each carrier’s application asks slightly different questions, and this information is used to rate a policy correctly and may reflect a slightly better premium.
These are just a few of the common subjectivities found on a package/pollution quote. Typically, the insured has already prepared many of these items, so they are easy to compile and could make a big difference to an insurance carrier in providing a competitive quote. For more information, contact us.