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UNDERWRITING REVIEW OF CLAIMS FILES

 

Claims handling of necessity focuses on the claim itself and adjusting it against the policy.  Often important underwriting issues and even defenses may be overlooked because there is no-one available to look at the file from an underwriting perspective.

If documentation such as application, inspection and policy are available to a person with an underwriting background, then important issues can be raised with the underwriters of the policy which may avoid policy defenses being lost to estoppel or other issues and may help identify underwriting issues in a broader sense.

Questions which can be raised will be either specific or generic - specific questions would include:

  • Was there any material misrepresentation made in securing the placement of the risk?
  • Was there non-disclosure of any material fact when the risk was placed?
  • Are there any problems with the way the policy was bound / issued?
  • Are there outstanding underwriting recommendations still outstanding?
  • Is the risk one capable of being written in the particular authority?  If the MGA exceeded their authority this should be highlighted early on as their E & O carrier may need to be involved.

These areas will raise potential defenses for underwriters or topics where the adjuster needs to delve more deeply.  Many of these will often be time - sensitive so an early identification can be critical.

Generic questions will cover areas such as:

  • Did the risk exhibit any features which suggest it was not a good fit for a MGA contract?
  • Were inspection recommendations followed up in a timely fashion?
  • Is there any kind of pattern of losses emanating from one MGA or one underwriter inside an MGA?
  • As a result of any of the above do underwriters want to take a closer look at any aspect of that MGA's underwriting or operations?

This service would potentially enhance reporting to underwriters and show a pro-active stance in protecting underwriters' options as early in the claims process as possible.  It would enable early engagement of coverage counsel (if needed) or whatever other steps may be needed to protect underwriters' position.


One hypothetical example may be worth looking at.

There is a fire loss at a risk which is written as a bar.  That is what the application says but no bar / tavern supplemental was obtained.  The inspection shows clearly the risk is a night club (which is an excluded class under contract) - bouncers/ admission charge / no plated food etc.  However, the inspection had no recommendations per se so was simply placed on the file.  The underwriting review will highlight the potential misrepresentation but show how that defense has been lost with the inspection.  This will raise a potential subrogation against the MGA which underwriters may take or they may want to audit the procedures at that MGA and maybe review other bar / tavern classed risks.

It could be that if the fire loss is not problematic and not really related to the occupancy, this issue may never surface and underwriters would lose the opportunity to review what is happening at that MGA.