Laws affecting Underwriting13th July 2021 0 By indiafreenotes
Underwriting requires the following skills:
- Knowledge of individual risk peculiarities.
- Assessing how the risk & a peril produce potential losses.
- Estimating magnitude of losses – peril-wise.
- Estimating insured‘s systems & capabilities for prevention.
- minimization of losses.
- Prescribing rates, terms & conditions.
- Deciding on retention & risk transfer.
Consideration of application.
The Board shall take into account for considering the grant of a certificate, all matters which are relevant to or relating to underwriting and in particular the following, namely, whether the applicant:
(a) Has the necessary infrastructure, like adequate office space, equipment’s and manpower to effectively discharge his activities
(b) Has any past experience in the underwriting or has in his employment minimum two persons who had the experience in underwriting;
(c) Any person, directly or indirectly connected with the applicant has not been granted registration by the Board under the Act.
(d) Fulfils the capital adequacy requirements specified in regulation 7.
(e) Any of its director, partner or principal officer is or has at any time been convicted for any offence involving moral turpitude or has been found guilty of any economic offence.
General responsibilities of an underwriter.
(1) The underwriter shall not derive any direct or indirect benefit from underwriting the issue other than the commission or brokerage payable under an agreement for underwriting.
(2) The total underwriting obligations under all the agreements referred to in clause (b) of rule 4 shall not exceed twenty times the net worth referred to in regulation 7.
(3) Every underwriter, in the event of being called upon to subscribe for securities of a body corporate pursuant to an agreement referred to in clause (b) of sub-regulation (1) of regulation 9A] shall subscribe to such securities within 45 days of the receipt of such intimation from such body corporate.