Principle
The managing agent has effective systems and processes to record, monitor and assess its underwriting exposures.
Minimum standards
The managing agent can demonstrate that it has effective systems and processes for:
- Assessing and modelling exposure for each managed syndicate.
- Validating the output from those processes and systems.
- Integrating the output within annual business plans, underwriting controls and the capital setting process.
- Regular reporting of exposures to the board and to Lloyd's to comply with Lloyd's exposure reporting requirements.
View guidance on ownership and exposure capture.
Effective systems and processes have the following features:
- material and reasonably foreseeable accumulations are considered and the resultant loss potential assessed.
- the relevant data to assess and model exposure in different classes of business is identified and obtained when risks are underwritten and input into the relevant system shortly thereafter.
View guidance on structured approach to exposure management.
- where models are employed, more than one model is used (whether internally developed or externally sourced) to determine exposure. The modelling is carried out by appropriately skilled and experienced personnel.
- the output is challenged and tested independently of the underwriting function by individuals who have sufficient knowledge, experience and status.
View guidance on consistency of approach.
