Fire Insurance Underwriting The term underwriting is broadly used to denote – the principles and practices concerning the fixing of rates, – the acceptance or rejection of the risks, – the total amount of acceptance, – the amount of retention for insurer’s own account and – treatment of the balance through reinsurance. Factors enter into underwriting – The production of well spread and large volume of business – Selection of the risk – Limits to be retained – Reinsurance of surplus

Features of risk, influencing the underwriting decisions – The physical nature of the risk Construction Size of risk Processes and occupancy Goods-class

– The probable effects of fire on stocks Stock procurement Stock susceptibility

– Fire Protection arrangements Fire extinguishing appliances Fire brigade facilities Sprinkler installations

– The situation of the risk Degree of hazard from adjacent properties Geographic locations

– Retention is arrived with Probable maximum loss (PML) for a class of risk & Maximum amount of loss (MAL) the insurer is prepared to incur Total loss

– Reinsurance arrangements Facultative reinsurance Treaty reinsurance