Features of an effective process are likely to include:
1) A risk based approach to the PBQA process taking into account:
- Class of business
- Size of line
- Brokers’ wordings performance
- Type of wording – bespoke or complex, use of standard terms
- Individual underwriter’s knowledge and experience of the territories/ class of business / wordings experience
- Availability of specialist wordings/ legal knowledge of insurance contract law
- Assessment of the leader’s capability, where following.
- Ensuring that reinsurance clips have appropriate reinsurance conditions and clarity regarding underlying/associated wordings.
This can be achieved by developing a matrix of these risk factors to identify which risks fall into high, medium and low risk groups with appropriate procedures developed for each category.
For higher risk business cases eg new business or large risks with bespoke wordings, or where there are concerns regarding the quality of the leader’s procedures the process could feature:
- Encouragement of brokers to submit wordings early for assessment.
- Use of specialist wordings/legal personnel with the appropriate skill, knowledge and experience.
- Use of the Lloyd's Wordings Repository and other commercial wordings products to support specialist knowledge.
- Feed back to underwriters of issues/ problems arising.
- Checks against Lloyd’s QA Tool either internally or subcontracted to a third party supplier.
For medium risk business eg renewal of large risks, or small risks with bespoke wordings, where underwriter has good knowledge of the territorial requirements the process might feature:
- Use of commercial software products to compare wordings.
- Development and use of standard wordings for each class of business (retaining these within the Lloyd's Wordings Repository).
- Check against Lloyd’s QA tool or other commercial products, whether conducted internally or subcontracted to a third party supplier.
- Feed back to underwriters of issues/ problems arising.
For low risk business eg renewal business written on predefined wordings where the underwriter has good knowledge/ experience of the class of business and territories.
- Rely on the underwriter’s knowledge and experience with peer review by personnel with required experience to validate the quality of the process.
2) Continuing assessment of the quality of slips, including wordings undertaken through periodic peer review reporting to the appropriate governing body within the managing agent and feeding back to underwriters which includes:
- Identification of claims issues arising from wordings e.g. coverage disputes.
- Identification of issues arising from lack of experience.
- Output from internal audit process.
- Customer complaints.
- Independent review of the quality of a sample of wordings with more risks drawn from the higher, then medium, risk categories.
- An assessment/ vetting of the performance of leaders for each class of business against the in house PBQA procedures.
- Any issues regarding reinsurance slip conditions or underlying/associated wordings.
- Feed back from Lloyd’s review process.
3) PBQA procedures set out, with clear accountability for their operation and a review process to ensure that they remain appropriate to the managing agent’s specific business requirements.
Further information on tools/ services and sources of assistance can be accessed via lloyds.com.
