The role of insurance company’s underwriting management involves various responsibilities: -
· Participating in the overall management of the insurance company
· Arranging Reinsurance
· Delegating underwriting authority
· Making and enforcing underwriting guidelines
· Monitoring the results of the underwriting guidelines
Participating in Insurance Company Management
The head of insurance underwriting department participates with other members of the insurance top management team in making broad business decisions regarding the company’s objectives and how it plans to meet those objectives. Given a top management consensus on the insurer’s broad goals and how its capacity should be allocated, underwriting management must decide how underwriting activities can contribute to these goals.
Arranging Reinsurance
Another aspect of Underwriting Management is arranging reinsurance. There are two broad categories of reinsurance i.e., Treaty Reinsurance and Facultative Reinsurance.
Treaty Reinsurance
It is an arrangement whereby an reinsurer agrees to reinsure automatically a portion of all the eligible insurance of the primary insurer. There is no individual selection of policies. Treaty requires that primary insurer is required to reinsure and reinsurer must accept all the business covered by the treaty.
This involves a separate transaction for each reinsurance policy and it is not an automatic binding between the primary insurer and the reinsurer that is the reinsurer evaluates individually each policy that is asked to reinsure.
CHAPTER 5 : UNDERWRITING
