6 Ways to Manage Volatility and Grow

March 19, 2014| Von Brooke Cote | Asset Management, P/C General Industry, Commercial Umbrella, Personal Umbrella | English

A predominantly personal lines insurance company was interested in expanding its commercial book of business. When making such an expansion, many personal lines-dominant carriers tend to apply to commercial business the same types of underwriting, pricing and selection processes that they have used in their highly successful personal lines practice. In this case, however, the insurer wanted to make sure the company avoided the pitfalls of that approach.

Additionally, the company had more than adequate capital and wanted to keep larger net retentions on its reinsurance programs. However, it was looking for help understanding the severity piece of personal and commercial lines exposures. It sought both a better understanding of risk and comfort with the pricing of the severity piece before increasing its retentions.

  1. Underwriting Guidelines

    We shared our experience on commercial property business, and worked with the company to develop property underwriting guidelines for habitational business.

  2. Claims Insights

    When a large, unusual claim occurred, our claim executives provided counsel and recommended experts to ensure a positive experience for the company's customers, while mitigating claims costs.

  3. New Products

    Our umbrella line-of-business expert furnished the tools and information the company needed to start up and grow a brand new commercial umbrella product.

  4. A Point of View on New Risk

    Since the client had no previous experience writing commercial contractors’ business, our casualty facultative underwriters assisted its actuaries in understanding the exposures for this class of business.

  5. Efficiency

    We arranged a cost-effective “bundled” agreement for a number of property risks with higher limits. This was cheaper than a reinsurance treaty and equally efficient.

  6. An Outside Viewpoint on Unusual Exposures

    Our underwriters serve as a “referral” for commercial auto exposures that are new to the customer. In this case, we provided training and discussion on the line of business that helped the company's actuaries think through loss ratios selections and performance of their book. Since then, the customer has grown its auto book and strengthened its own underwriting and pricing capabilities.

Our goal was the same as that of the company: to write more business profitably. As understanding of exposures increases at the company and the risks become predictable and familiar, the company could also retain more net.

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