What is Umbrella Liability Insurance?

Umbrella reinsurance means that the assignee classifies various types of insurance business, such as auto, fire, theft, liability, etc. into one reinsurance contract. This reinsurance protection function is higher and the risk is more dispersed. An umbrella reinsurance contract is accepted by a group of reinsurers at a fixed ratio, and each member has no right to choose a specific type of business.

Umbrella reinsurance

Right!

Umbrella reinsurance means that the assignee classifies various types of insurance business, such as auto, fire, theft, liability, etc. into one reinsurance contract. This reinsurance protection function is higher and the risk is more dispersed. An umbrella reinsurance contract is accepted by a group of reinsurers at a fixed ratio, and each member has no right to choose a specific type of business.

Commercial umbrella insurance policies first appeared in the United States in 1947 and were issued by Lloyd's of London. The purpose of this product, both then and now, is based on (and affiliated with) priority insurance to provide additional liability protection for the insured's losses. Priority insurance provides protection for common accidental losses, while commercial umbrella insurance generally provides protection for larger, catastrophic losses.

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Due to fierce competition, the property and accident insurance market has experienced a 10-year "downturn". At present, this market has begun to rebound, and the prices of almost all insurance products have started to rise. Although it lags behind the priority insurance products, the premium rate of commercial umbrella insurance has also shown a steady increase since the end of 2000. The obvious rise in compensation is an important factor influencing commercial umbrella insurance decisions. Perhaps due to the emergence of anti-lock brakes (ABS) and airbags, and the implementation of drinking and driving laws, the frequency of compensation for car insurance has declined in the past ten years. increased. According to a recent report from the Insurance Services Association, compensation for commercial vehicle insurance increased by an average of 5.5% annually from 1994 to 1999. Further analysis of relevant data, we will find that the compensation range from 1 million to 2 million has an average annual increase of 22.3%, which is higher than the growth of any economy in the same period. We can also see this increasing trend in jury court decisions. According to the National Law Review, the average amount of arbitration compensation for victims of quadriplegics aged 18 to 29 increased from $ 2 million in 1993 to $ 10 million in 1999. This rising trend of court rulings has had a huge impact on commercial umbrella insurance. In fact, we can also feel this from our own experience. For example, as a reinsurer, we often get reinsurance compensation from customers. In sharp contrast to the rising trend of compensation, since the end of the 1980s, the starting point has never shown any rise (if there is, it has only increased slightly). As a result, companies that provide commercial umbrella insurance products have suffered a higher level of losses than in the past. Moreover, the magnitude of compensation has also increased. In fact, we can also see this from the increase in the average amount of arbitration compensation mentioned above (compensation for victims of quadriplegia). All these factors work together and will definitely have a (bad) effect on commercial umbrella insurance skills. For most insureds, commercial umbrella insurance is not a very important product, so little attention is paid to this industry in corporate management. Even when management is concerned about the profitability of this industry, it is difficult for individual insurers to obtain enough relevant information to discover industry trends and fully evaluate their impact. It is expected that there will be more new risks in the future, many of which are risks that cannot be inferred based on current insurance practices and pricing methods. So far, we can see examples such as: toadstools, mad cow disease, food-borne diseases, employment practices, workplace violence, changes in the commercial vehicle environment caused by cross-border freight (with the full implementation of the North Atlantic Free Trade Area guidelines ) Wait, even asbestos risks may reappear.

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Insurance skills Successful insurers need to have excellent underwriting and pricing skills. In addition to managing some of the daily predictable liabilities and risks of property damage, they also need to control serious liability risks. It is worth noting that the pricing and insurance coverage applicable to priority insurance policy limits may not necessarily apply to commercial umbrella insurance with larger limits. Adequacy of premium rates Compared to premiums from priority insurance layers, the leverage of commercial umbrella insurance premiums on compensation limits is very low. Failure to conduct a comprehensive and accurate assessment of special risks often leads to deterioration of the operating performance of the umbrella insurance industry. Understanding long-term industries Not only must insurers understand and evaluate IBNRs that have occurred but have not been reported, they must also understand the importance of IBNRs in managing long-term industries. Commercial umbrella insurance is undoubtedly a "model" for long-term risks. In this industry, the "end" of an insurance year often takes 12 to 18 years. Evaluate changes in industry trends. Insurance companies need to continuously capture industry changes and determine the impact of these changes on the industry, especially for the commercial umbrella insurance industry. This is because changes in trends affect the industry. The impact may be much greater than the impact on other industries. How can we make a full evaluation of the changing trend of compensation (as reported by the Insurance Service Association mentioned above)? With the starting point of the commercial umbrella "stable", what is the reasonable price range for the current compensation limit? What is the price range in the future? Claims expertise. Successful commercial umbrella insurance underwriters must have a correct understanding of their claims capabilities and expertise, as this will facilitate the management of serious liability risks (and potentially large compensations that can result from them). The new problem insurer must constantly study various situations, make his own judgment, and implement an insurance action plan. Only in this way can he effectively deal with emerging problems and the risks they bring. What risks does the establishment of the North Atlantic Free Trade Zone pose to commercial vehicle insurance, and how does it affect the United States and other member states? When a rating agency like AM Best and Moody's asserts that the insurance industry's insurance reserves are $ 25 billion less than the asbestos compensation that needs to be paid, what will the bankruptcy of asbestos producers do to other companies throughout the asbestos distribution chain What about the impact?