Subjectivities (Part 1)

In my last two articles I discussed the Skills and Personality Traits of Successful Brokers. Those articles can be found here and here.

This article is the first of two which will help you navigate Subjectivities and understand how a lack of compliance with them can get brokers into trouble!

Before we discuss subjectivities on quotes in more detail, let’s explore how you can reduce the likelihood of having subjectivities applied to your quotes in the first place. Here is a list of some good broking practices to assist you with this:

• Ensuring you send all the following information in your pre-renewal email to clients/email to prospects – proposal forms, supplementals and information that underwriters have advised they will require
• Ensuring that clients/prospects provide you with all the above information fully completed
• Ensuring you send all the above fully completed information to underwriters
• Using your own initiative to add valuable information to your submission. This could be in the form of information gathered from your client/prospect in a meeting with them (like some Q&A between you), or it could be via your request for additional information (like a corporate structure diagram – always a favourite of mine!).

Note: In this article, and the next, I will refer to clients and prospects. I do this because this topic is relevant to both existing (renewal) clients as well as new business prospects.

Subjectivities – Immediate Action Required or Not?

The overwhelming majority of subjectivities will require your immediate action to (hopefully) avoid any last-minute complications with binding the policy. In stating this, starting your renewal/placement process as early as possible will greatly assist you in having sufficient time to obtain the necessary responses to any subjectivities from your clients/prospects. This is basic broker “hygiene” which will in turn help satisfy the underwriter’s requirements and help keep you out of trouble.

The reason immediate action is normally required is because client/prospect responses to subjectivities may elicit further questions/clarifications, or even additional “new” subjectivities from underwriters. It is also possible that your client’s/prospect’s response to a subjectivity elicits a further question from you, or as is more often the case, a further request by you for your client/prospect to adequately respond to the initial subjectivity.

A possible exception to the rule of immediate action being required on a subjectivity would be with a No Claims Declaration (NCD), a No Material Changes Declaration (NMCD), or simply a requirement that the proposal form be re-signed/re-dated closer to the date of binding. Note: these declarations are not all the same and do not necessarily “achieve” the same thing. They also have different disclosure-related ramifications on the policy once bound. The scope of this article will not explore these differences, however.

The reason why such declarations may not require immediate action is because they generally need to be addressed closer to the date of binding the policy. For example, let’s assume you have started a renewal process early and have received renewal terms from the incumbent insurer well before the expiry date of the existing policy. In this enviable position, an NCD (that needs to be completed within 30 days of the expiry date), may not be able to be actioned immediately (as the date at the time of quoting is over 30 days from the expiry date).

Esteemed readers, please read Part 2 of this topic here.

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