[Products] 3-in-1 Liablity Product Bundle for SME

BACKGROUND

A Melbourne underwriting agency has unveiled a product combining 3 key policies for SMEs.

The Product covers Professional Indemnity (PI), Public Liability (PL) and Management Liability (ML) and is not limited to particular occupation.

What are the benefits and impacts? Any risks & weaknesses involved?

Link to the article:-

http://www.insuranceandrisk.com.au/09037420/Underwriter_launches_new_SME_bundle?zone1=3&zone2=4 


BENEFITS & IMPACT

The biggest impact when introducing a combined policy is the synergy across all levels from sales & marketing, underwriters and back-end offices.  Below are some benefits founds in the business process:-

-Faster turn-around-time as the policy can be proposed, approved, and issued by less people.

-Faster underwriting process with less duplication of documents submission.

- Risk coverage (clauses & extensions) duplication prevented.

-Easier monitoring for marketers with holistic view of insured’s total premium production vs claims ratio.

-Able to capture customer’s  other insurance businesses with other insurer.

-Brokers/Customers should be able to enjoy better rates.


RISKS & WEAKNESSES

 With 3 products merged, the most significant risk  is the practicality of issuing 3 coverage under a single policy. Below are some potential issues:-

-Product might not  be suitable for SMEs with small management size.

-Only suitable for SMEs involved with professional services.

-Harder to identify and monitor loss making classes by underwriters.

-A revamp of underwriting criteria with relaxed risk acceptance criteria to allow 3 different coverage for 1 insured.

-Underwriters should be equipped with technical knowledge to underwrite all 3 classes to prevent delays in risks acceptance process.