Combined Liability: Evaluating Manual and Non-manual trades while Navigating Various Sales Journeys

Client activities are the primary driver of employers, public or products liability risk. Office based trades, whilst not without risk, are certainly at the lower end of the risk spectrum. Those businesses whose staff and labour only subcontractors carry out administrative processes but do their work away from their own premises presents a further increased risk and those carrying out manual tasks again elevates the risk further. The nature of those manual tasks and the equipment they use adds an additional layer of exposure and those businesses using heat to complete their processes or carrying out their work at height once again increases both the likely frequency and severity of any ultimate claim.

At the top end of the risk scale sit insureds whose organisations carry out their work using heat, at height and in locations which could exacerbate the scale of any loss such as offshore installations or dockyards or whose products are integral in safety critical items. This scale of exposure has been developed through many years of actual, incurred losses and insurers have calculated corresponding rates which, when taking the historical performance into account and coupled with the correct deductibles and conditions, should deliver an underwriting profit on average policies placed.

Package insurance policies typically provide coverage for employers, public and products liability along with various material damage and business interruption covers. These policies can be purchased directly by policyholders through insurer websites or call centres (SMEs). Alternatively, customers can seek out the help of commercial insurance brokers who, in turn, will place these policies with a suitable insurer. Brokers can submit the customers risk information by rekeying it into an insurer extranet or transmitting the quote data without any re-keying through an e-trade product on a broker policy administration system. With a package combined liability policy, there is generally very little transactional underwriting undertaken by the insurer, instead choosing to rely upon industry classification and actuarial data to drive their selection, pricing and acceptance criteria. Whilst this route is extremely swift, it typically is catered for smaller business. It also doesn’t allow brokers to convey information which is pertinent to the insurers’ acceptance of the risk or the price which they will charge. There is thus a risk that customers may not be properly insured or may not even get cover via this route.

Open market liability insurance policies are significantly more bespoke than their package equivalents. Whilst the typical policy wording will generally be written on a combined basis allowing for employers, public and products liability to be provided together, an open market liability policy and those who underwrite them, are more willing to provide them on a stand-alone basis than a package policy. Insurers who underwrite open market liability policies will generally do so on a transactional basis which means that a large number of risk factors are considered rather than relying on homogenised data sets. The benefit of this for brokers is that, rather than answering a fixed and limited question set through an insurer's extranet platform or e-trade facility, they have the opportunity to present a much more comprehensive view of the risk ensuring full disclosure and an ability to negotiate the most competitive and bespoke terms possible. From an insurer perspective, as the customer submission is likely to have come within a pdf document via email, a significant amount of re-keying is likely to be required before the risk can even be triaged meaning that a large amount of time can be wasted reviewing cases which fall outset of the insurer’s appetite.

Online combined liability policies offer the same type of employers, public and products liability coverage found in a package policy albeit with the ability to accept risks for larger businesses and for risks with elements of heat or manual work away. There is also no obligation for the customer to purchase property insurance coverage as part of the same policy. The broker is required to input a reasonable amount of risk information through a platform, meaning that automation can carry out an immediate triage avoiding “slow no’s” for brokers and unnecessary reviews of risks which capacity will never accept for underwriters. The fact that risk information is provided by the broker at quote stage means that it can be recycled through the sales process avoiding the need for manual proposal forms and reducing the time it takes for policy documentation to be issued.

It is certain that there is a place for both package and open market policies. However, the challenge of being unable to properly accommodate larger businesses and convey relevant information that sits with package policies coupled with the inefficiencies and delays that sit with manual, open market policies can both be mitigated through the extended use of online combined liability policies.

Through the use of Upsurance’s advanced technology and automation, online combined liability policies can rival the speed and efficiency of a package policy with highly engaged underwriters, whilst comprehensive trade lists and bespoke question sets can allow those traditionally operating on an open market basis to receive all of the information they require in order to properly review and underwrite complex risks.