Advantages And Disadvantages Of Liability Underwriters

Liability insurance policies are generally different from all the other insurance policies as they are complex to cover. Therefore the underwriters must be familiar with the liability risks that are likely to be associated and affect commercial businesses, individuals and professionals. Therefore this generally means the underwriters have to be updated about the liability laws and court trends in order for them to be able to accurately distinguish between high risk applicants and the rest. Future risk must also be determined hence to avoid reoccurrence, past losses and judgments have to be taken into account when underwriting. There are a number of basis that are used some of them highlighted below with the drawbacks that the underwriters face

Therefore this is a major problem for the liability underwriters.

• Complexity

It is therefore considered a difficult way of underwriting liability due to its nature and attributes.

Manifestation basis

The manifestation basis is the one which always bring arguments as it seems unfair to the insurers. When one’s loss manifests, that is when the defect is noticed the insurer in force at that moment is the one held liable for that claim. It does not consider other events that may have happened before and caused this loss or damage. It is mainly used to underwrite employers’ liability policies therefore covers illness or injuries to the employee during their course of work.

Challenges

• Complexity

It makes it difficult to underwrite the policies as the insurers in force at the time the damages or loss manifests are the ones liable, they hesitate to underwrite such policies.

• Unfair

Insurers consider it as unfair as it does not take into account previous records and history.

II) Strategies they are using to mitigate the

This will help minimize the risks that they are facing and may also help them be able to calculate their profits accurately. Proper risk assessment should be carried out by assessors on the nature of employees, operations, working environment, liability exposures, business cycles that affect the business and financial capacity of the business. This will help to determine the impact a loss or injuries to employees will have on the business and how much they will be willing to spend on insuring such events. Therefore the underwriters will be able to know how careful or carefree they can be if they acquire the policy and are covered in the event of a