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View Poll Results: How much would you concede
$0 1 9.09%
$1-$99,999 0 0%
$100,000-$249,999 0 0%
$250,000-$499,999 2 18.18%
$500,000-$749,999 1 9.09%
$750,000-$999,999 1 9.09%
$1M-$1.49M 2 18.18%
$1.5M-$1.99M 1 9.09%
$2M-$2.49M 2 18.18%
$2.5M-$2.99M 0 0%
$3M-$3.99M 1 9.09%
$4M-$4.99M 0 0%
$5M-$7.49M 0 0%
$7.5M-$9.99M 0 0%
Free Policy 0 0%
Voters: 11. You may not vote on this poll

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  #1  
Old 11-18-2011, 12:25 AM
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Default How much premium would you concede to your underwriter?

Let's say you have an account that you've priced up to $10M. This is your best answer. The U/W says that the insured will pay is ($10M-$X.) He knows exactly how much the insured will pay. How much money are you willing to concede to write this policy?

Relevant Info
Even if you write this account for free, the impact on your company surplus is minimal.
Profit load = 10%
General Expenses & Other acquisition expenses = 10%
Commission = 10%
Everything Else = 0%
Due to corporate policy, these percentages are fixed.

The average duration for the payout of losses is 7 years.
Duration matched investments yield 0%.

*UW cannot overrule your price. In order to write this, you must concede.
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Last edited by silverfox; 11-18-2011 at 12:30 AM.. Reason: * means edited to add
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  #2  
Old 11-18-2011, 12:28 AM
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You don't have to concede to the UWs? :brainsplosion:
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  #3  
Old 11-18-2011, 12:33 AM
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Originally Posted by GuineaPig View Post
You don't have to concede to the UWs? :brainsplosion:
If the concession was $1 and you didn't make it, you'd get in trouble for not working with the UW. If the concession was $10M, you'd get in trouble if anyone other than the UW found out what you did. There's some middle ground. I'm asking what the most you would concede is.
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Old 11-18-2011, 06:31 AM
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Is this new business or a renewal?

And boy does your investment department suck.
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Old 11-18-2011, 07:55 AM
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When I did large and middle account pricing, the answer was totally dependent on the u/w. We kept track of the actuarial indication and the charged price for the year. Some u/w would charge over the indication when the market would allow it, and therefore I had no problem signing off on an $8M premium for an account like this, because they had built up some cushion (and even if they only had $1M in cushion right now, I knew they would make an effort to get it back).

Some u/w would never consider charge over the indication, so then we gave them very little leeway under the indication as well.
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Last edited by MountainHawk; 11-18-2011 at 11:09 AM..
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Old 11-18-2011, 09:54 AM
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Originally Posted by 3.14 View Post
Is this new business or a renewal?

And boy does your investment department suck.
New business. Even if you write it, they plan on going out to market again next year because they heard w are in a soft market.
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Old 11-18-2011, 10:12 AM
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I know you said that the percentages are fixed. Is the broker/agent an exclusive broker/agent (e.g. like allstate/state farm), or is it a "willis/marsh" type broker? If so, can you get the broker to take less commission?

CM/Occ?
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Old 11-18-2011, 11:03 AM
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The broker is a wholly owned subsidiary of your insurance company's holding company and always takes 10%. It's non-negotiable. Broker profits are in a different profit center.

Occurrence based policy.

I don't think it matters because I gave you the duration of the payout, but let's say it's a GL policy with $50M limits. Coverage form has standard ISO exclusions.
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Old 11-18-2011, 12:15 PM
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Quote:
Originally Posted by silverfox View Post
Let's say you have an account that you've priced up to $10M. This is your best answer. The U/W says that the insured will pay is ($10M-$X.) He knows exactly how much the insured will pay. How much money are you willing to concede to write this policy?

Relevant Info
Even if you write this account for free, the impact on your company surplus is minimal.
Profit load = 10%
General Expenses & Other acquisition expenses = 10%
Commission = 10%
Everything Else = 0%
Due to corporate policy, these percentages are fixed.

The average duration for the payout of losses is 7 years.
Duration matched investments yield 0%.

*UW cannot overrule your price. In order to write this, you must concede.
Bolded red is a major concern to me. How was this assumption determined? By U/W?
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Old 11-18-2011, 12:21 PM
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Originally Posted by Vorian Atreides View Post
Bolded red is a major concern to me. How was this assumption determined? By U/W?
Presumably limits/surplus < threshold for minimal.
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