Why Underwriters Ask for Certain Information
Staffing Risk Management
When working with my staffing clients, I often get asked why these needy underwriters ask for all of this revealing information about their business. I often reply with a simple question: “Would you take a huge risk on something you knew nothing about?” At this point the realization sets in. The underwriters and their respective insurance carriers are promising to pay millions of dollars in the event that something unexpected was to happen. Underwriters want to know what they’re signing up for – I mean, wouldn’t you?
Not only does providing full and complete information allow an underwriter to assess the risk in insuring your company, but it also gives you the chance to show off your sound business practices. After all, if you have something great going for your company, wouldn’t you want to show it off?
The more information you can provide the underwriters with, the more comfortable they’ll feel with insuring your exposures. The more comfortable these underwriters feel, the more apt they are to giving you coverage enhancements and competitive pricing.
So let’s dig into some information that underwriters typically ask a staffing company for…
Liability Package Program
- Employee Handbook – Needed for your Employment Practices Liability policy, as it speaks to your hiring and firing practices, employment at-will and anti-harassment/discrimination policies. The handbook is also used as an overall tool for the underwriter to learn the processes and procedures of your company.
- Quarterly 941’s – Needed for proof of payroll history to verify the information on the application is accurate.
- Loss Runs and Historical Data – Underwriters prefer to know how you’ve performed in past years, both with claims and payrolls/revenues. Past performance is often an indication of future performance.
- Example Client Contract – Shows how your company contractually protects its business affairs and what kinds of services/responsibilities your company is agreeing to provide.
- Supplemental Applications – Used to gather additional underwriting information such as projected revenues/payrolls, Federal Employer ID, office locations, etc…
- Business Plan & Officer Resumes – Typically only needed for start-up firms who do not have any loss experience accumulated.
Workers' Compensation Program
- Projected Payrolls by Class Code – Each insurance carrier has a specific appetite for risk. They want to know what class codes you’re working under and how much payroll is associated with each code.
- Detailed Description of Class Codes – Underwriters may not be allowed to insure specific class codes due to their risk appetite and/or because their reinsurer will not allow them. With adequate information and a compelling case, sometimes exceptions can be made.
- Risk Control Reports/Clients’ OSHA Histories – The underwriter would like an idea of your clients’ safety culture. If your clients exhibit very careless behavior, the chance of your employees being injured on their site is a lot higher. If clients have strong safety measures and employ risk managers who are actively involved with operations, this will help keep employees’ safe and bring comfort to the underwriter.
- Loss Runs and Historical Data (including prior years’ payrolls by class code and premiums) – Past performance is often an indication of future performance, as well as confirmation of stability.
- Experience Mod Rating Worksheets – Quickest snapshot of your past performance. Your Experience Mod is essentially a side-by-side comparison of how you’ve performed compared to similar companies in your industry.
- Explanation of Large Losses (usually $25k and above) – Claims are going to happen. Underwriters want to know why the large claims happened, what exactly happened, and most importantly, what you’ve done to make sure this doesn’t happen again. If you’ve taken no action to prevent future similar losses from occurring, the underwriter will assume carelessness and that it could very easily happen again.
- Safety Manual – Showcases your safety program and the manner in which new hires go through orientation, as well as any ongoing regular safety trainings that are conducted. Risk
- Risk Background Narrative – This allows your broker to give the “big picture” about your company and explain why the underwriter should consider insuring your program.
- Financials – These are typically only needed for larger companies/large premium size programs. This ensures you’re a financially stable company that can be held accountable.
Regardless of which insurance carrier you’re with, all underwriters are looking to protect their company’s assets (remain profitable) while partnering with your organization so that each involved party is on-board with mitigating risk as best as possible. It’s imperative that your broker accurately and strongly presents your company to the marketplace so you’re placed with an insurance carrier that will bring you the most benefit and ease in conducting business.
- Once Upon a Time
- Four Ways to Create a Compelling Underwriting Case
- Slow and Steady Wins the Rates
- Claims Management Webinar Replay
- Safety Culture Performance Metrics Webinar Replay
- OSHA Temporary Worker Initiative & Client Selecion Webinar Replay
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