Subjectivities (Part 2)

By Oren Jacobi, Founder of Insurance Training Australia

Part 1 of this topic, which you can read here, explored how you could reduce the likelihood of having subjectivities applied to your quotes as well as a discussion about how most subjectivities require immediate action.

Pre or Post Binding?

The first point I would like to touch on in this Part 2 of the Subjectivities topic relates to subjectivities which are required prior to binding (more common) versus those accepted by insurers after binding (less common).

I strongly recommend you be very careful with subjectivities that can be provided “post-binding”. This is because depending on their nature (and your client’s/prospect’s response to them), you could find that the content of their response puts the policy that was already bound (without the response to the subjectivity at the time of binding), in jeopardy. Most underwriters will be well aware of this factor and make such “critical” subjectivities required prior to binding, i.e. the subjectivity must be satisfied prior to the underwriter agreeing to bind (or effect) cover.

In stating all this, there are certain subjectivities that could “safely” be provided after binding. Some examples include:

• A confirmation of a physical address (when you know the client/prospect is in Australia)
• A confirmation of revenue/staff splits by State/Territory for stamp duty purposes (providing there are no overseas operations that appear for the first time when obtaining this information!)
• Other subjectivities linked to administrative matters – rather than coverage matters

Examples of Subjectivities

Let’s now look at some common examples of subjectivities that underwriters may impose. You will notice how some of these relate to the good broking practices that I identified in my previous article:

• Completion of unanswered questions in proposal forms (something you can avoid by checking this before sending your submission)
• Additional information requirements based on answers in proposal forms. This often takes the form of an explicit request listed in the proposal form due to a positive or negative response to a question, i.e. a Yes/No answer. Additional information about a claim or circumstance (which I may refer to as a “matter”) is a good example of this. The requirement here would generally be to provide full details of the matter, costs associated with it, and an explanation of remedial measures that have been taken to avoid the matter from reoccurring in the future
• Supplementary information such as requests for a business plan (for a start-up business), a corporate structure diagram, financial information, or specific details of future funding

In addition to the above insurer subjectivities, using your own acumen to know that a particular response to a question requires further information or clarification (even when there is no explicit request in the proposal form for this – as seen in the second bullet point above), is highly recommended. Such information could also come from a conversation/meeting with your client/prospect. Again, this is independent of any request in a proposal form and is initiated by you.

Relax and Take a Deep Breath!

A final thought, and in noting it I realise how busy you all are (especially at this time of the year!).

Before you get upset about subjectivities being applied to quotes, remember that underwriters are often just following internal guidelines, or possibly, adding a condition imposed by a colleague or manager who has more underwriting authority than them.

Working with underwriters, even when their requirements may seem onerous, will often get you better results than pushing back against them. In stating this, there are instances when you need to query subjectivities – but remember to pick your battles!