The Underwriting Function
You are the Transportation Underwriter for Autos-R-US Insurance Company. You have a good working relationship with your broker, Joe, at PB&J Brokers and have written several accounts so far this year. Joe has a new prospect account and would like for you to review the information on the company to see if this is something you would be interested in writing. Your broker only wants you to consider the Auto & Workers' Compensation lines. There have been no losses on the General Liability (GL) in the last 5 years, however, the prospect account is not sure if they want to move their GL from their current carrier.
The broker does not have applications ready right now but wanted to see if you would be a market for this account. Note that Autos-R-US can be pretty conservative and selective in regards to the risks they decide to take on.
With the information you have below, go through the Underwriting Process to determine what information you may need to gather and what underwriting alternatives you may consider. If you decide to write this account, what are some things you feel you may need to monitor throughout the policy period? Please feel free to make assumptions as I really want to see how you think in regards to this account.
LMN Trucking is a pipe hauler in the Southern region that was established in 1996. It is a family-owned business with their main office in Dallas, TX. LMN hauls large pipes for drilling rigs throughout TX, LA & OK. It currently has 100 drivers and 10 administrative employees. LMN Trucking plans to expand their operations into the Northeast, mainly Pennsylvania within the year. The demand for hauling services in that area is high and they anticipate they will need an additional 50 drivers to start. LMN plans to open another location in Pennsylvania, but not sure what city at this point. Their current limit of insurance on their Auto policy is $1 mil. They are interested in increasing that limit to $3 mil to support their expansion. LMN's premium in the past has been pretty significant and they are looking to see if they would qualify for payment plan. Their D&B rating is a 1R3. They have also hired a Safety Director in the last 3 years following a multi-million dollar Auto claim that was due to our negligence. If LMN expands into Pennsylvania, the Safety Director will need to manage both the Dallas & Pennsylvania location for the first year.
Loss ratios for the last 5 years are as follows:
AUTO
|
Policy year
|
2016-2017
|
2015-2016
|
2014-2015
|
2013-2014
|
2012-2013
|
|
Loss ratio
|
42%
|
55%
|
165%
|
110%
|
99%
|
WORKERS' COMPENSATION
|
Policy year
|
2016-2017
|
2015-2016
|
2014-2015
|
2013-2014
|
2012-2013
|
|
Loss ratio
|
30%
|
41%
|
110%
|
92%
|
77%
|