This addendum is only necessary if the parties have checked the option in Paragraph 4 a i above. Financing approval will be deemed to have been obtained when the lender determines that Purchaser has satisfied all of lender's financial requirements those items relating to Purchaser's assets, income and credit history. Each note must be secured by an appropriate instrument authorized within the state, typically either 1 a mortgage or 2 vendor's and deed of trust liens. Consult an attorney if you are unsure as to which instrument is appropriate for this transaction.
Insurance practice Underwriting and rate making The two basic functions in insurance are underwriting and rating, which are closely related to each other.
Underwriting deals with the selection of risks, and rating deals with the pricing system applicable to the risks accepted. Underwriting principles Underwriting has to do with the selection of subjects for insurance in such a manner that general company objectives are met.
The main objective of underwriting is to see that the risk accepted by the insurer corresponds to that assumed in the rating structure.
There is often a tendency toward adverse selectionwhich the underwriter must try to prevent. Adverse selection occurs when those most likely to suffer loss are covered in greater proportion than others.
The insurer must decide upon certain standards, terms, and conditions for applicants, project estimated losses and expenses through the anticipated period of coverage, and calculate reasonably accurate rates to cover these losses and expenses.
Since many factors affect losses and expenses, the underwriting task is complex and uncertain. Bad underwriting has resulted in the failure of many insurers. In some types of insurance major underwriting decisions are made in the field, and in other types they are made at the home office.
In the field of property and liability insuranceon the other hand, the contract is cancelable if the home-office underwriter later finds the risk to be unacceptable.
It is not uncommon for a property and liability insurer to accept large risks only to cancel them at a later time after the full facts are analyzed. The insurance underwriter must tread a thin line between undue strictness and undue laxity in the acceptance of risk. An important initial task of the underwriter is to try to prevent adverse selection by analyzing the hazards that surround the risk.
Three basic types of hazards have been identified as moralpsychological, and physical. A moral hazard exists when the applicant may either want an outright loss to occur or may have a tendency to be less than careful with property. A psychological hazard exists when an individual unconsciously behaves in such a way as to engender losses.
Physical hazards are conditions surrounding property or persons that increase the danger of loss. An underwriter may suspect the existence of a moral hazard on applications submitted by persons with known records of dishonesty or when excessive coverage is sought or the replacement value of the property exceeds its value as a profit-making enterprise.
Underwriters are aware that fire losses are more likely to occur during business depressions. The underwriter can detect moral hazard in various ways: The psychological type of hazard can take a number of forms.
It is well known that persons applying for annuities tend to have longer than average lives, and consequently a special mortality table is used for annuitants. Certain types of insanity have to be watched for—notably the impulse to set fires.
Physical hazards include such things as wood-frame construction in buildings, particularly in areas where such properties are densely concentrated.
Earthquake insurance rates tend to be high where geologic faults exist as in San Francisco, which is built almost directly over such a fault.
Each kind of insurance has its characteristic hazards. In fire insurance the physical hazards are analyzed according to four major factors: In underwriting automobile insurancethe underwriter considers the following factors: In some cases tests of emotional maturity are administered. Some underwriters even consider such factors as the school records of student drivers and whether or not driving courses have been taken.
The hazards considered in the underwriting of general liability insurance depend on the type of business and the record of the person applying for coverage.
Rate making Closely associated with underwriting is the rate-making function. If, for example, the underwriter decides that the most important factor in discriminating between different risk characteristics is age, the rates will be differentiated according to age. The rate is the price per unit of exposure.
The rate reflects three major elements:R&W insurance is designed to protect the policyholder from losses resulting from breaches of representations and warranties contained in a purchase agreement for . LegionCare Overview. LEGIONCARE NO COST TO YOU ACCIDENTAL DEATH INSURANCE PROTECTION GUARANTEED ** TO LEGIONNAIRES.
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Insurance in South Africa describes a mechanism in that country for the reduction or minimisation of loss, owing to the constant exposure of people and assets to risks (be they natural or financial or personal). The kinds of loss which arise if such risks eventuate may be either patrimonial or non-patrimonial.
A general definition of insurance is supplied in the case of Lake v Reinsurance. Medgulf contracts with The Physicians Syndicate Learn more. Privacy. Terms & Conditions. Update your company profile or program listings. Keeping your information current on this site is the best way to assure your information is correct in next year’s printed edition.