PINS S4.3 Risk management policy — underwriting risk

An insurer's risk management policy for underwriting risk should include:

(a) a statement of the insurer's willingness and capacity to accept risk;
(b) the nature of insurance business that the insurer is to underwrite including:
(i) classes of insurance;
(ii) the areas where it conducts business;
(iii) the types of risks included and excluded; and
(iv) the criteria for the use of reinsurance in the different classes of insurance;
(c) details of the formal risk assessment process in the underwriting of insurance, including:
(i) the criteria used for risk assessment;
(ii) the methods for monitoring emerging experience; and
(iii) the methods by which the emerging experience is taken into consideration in the underwriting process;
(d) the process for setting approval authorities and the limits to those authorities (including controls surrounding delegations given to intermediaries of the insurer);
(e) risk and aggregate concentration limits; and
(f) methods for monitoring compliance with policies and procedures regarding underwriting, such as:
(i) internal audit (but only if it is established that the internal audit function has the appropriate skills and experience to perform such activities);
(ii) reviews by area heads or portfolio managers;
(iii) peer review of policies (including details of the staff responsible for undertaking the peer review, the frequency of such reviews and the reporting arrangements for the results); and
(iv) in the case of reinsurers — audits of ceding companies to ensure that reinsurance assumed is in accordance with contracts in place.
Inserted by QFCRA RM/2013-1 and amended by Editorial changes (as from 1st January 2015).