Property Casualty Insurance

Property and Casualty Insurance

When to Use

• Explain P&C lines, coverages, and how commercial vs personal programs differ
• Walk through underwriting workflow: appetite, submission, quote, bind, endorsements
• Clarify policy mechanics: occurrence vs claims-made, limits, deductibles, exclusions, triggers
• Describe claims lifecycle from FNOL through investigation, reserving, settlement, litigation
• Frame reinsurance structures and catastrophe risk transfer at overview level
• Compare distribution models (agent, broker, MGA, direct) and typical economics
• Interpret underwriting and profitability metrics (loss ratio, expense ratio, combined ratio)
• Outline state insurance regulation concepts (DOI oversight, rate/form filing)—not legal advice
• Support business cases, operating reviews, or due diligence with P&C domain context

When NOT to Use

• Life, health, annuity, or long-term care product design and pricing depth → dedicated life/health skills if available; otherwise note limitation
• Loss development triangles, IBNR methods, credibility studies, or appointed-actuary sign-off → actuary
• Legal interpretation of policy wording, coverage disputes, or regulatory enforcement → commercial-counsel
• Corporate FP&A, investor metrics, or non-insurance financial modeling → financial-analyst (if installed)
• SOC 2 / ISO control mapping without insurance operations context → compliance-engineer
• Executive strategy without insurance domain detail → business-consultant
• Enterprise risk registers unrelated to underwriting/claims → security-risk-analyst (if installed)
• AML/financial crime or sanctions programs → aml-compliance, financial-intelligence-unit

Related skills

Core Workflows

1. Engagement scoping

Before analysis:

1. Segment — Personal vs commercial; admitted vs surplus; program vs single policy 2. Line of business — Property, GL, WC, auto, umbrella, specialty, package 3. Decision — Quote, renewal, claims handling, reinsurance placement, regulatory filing context 4. Jurisdiction — State(s), filing status, experience mod (WC), territory 5. Materiality — Limits, deductibles, cat exposure, class codes, prior loss history

See `references/pc_insurance_scope_and_lines.md`.

2. Underwriting and risk selection

1. Define appetite and declination triggers (class, geography, limit profile) 2. Ingest submission: application, loss runs, SOV, financials, inspections 3. Apply rating variables and manual vs filed factors; document debits/credits 4. Set terms: limits, deductibles/SIR, endorsements, subjectivities 5. Price to target loss ratio and combined ratio; note reinsurance and cat load 6. Bind with clear conditions; track endorsements and mid-term changes

See `references/underwriting_and_risk_selection.md`.

3. Policy coverage and forms

1. Identify coverage part (CG, CP, CA, WC, etc.) and edition date 2. Map insuring agreement, exclusions, conditions, and endorsements 3. Confirm trigger (occurrence vs claims-made) and retro dates where applicable 4. Reconcile limits (per occurrence, aggregate, sublimits) and deductibles/SIR 5. Flag common gaps (ordinance/law, BI waiting period, employee injury exclusions) 6. Escalate wording disputes to commercial-counsel

See `references/policy_coverage_and_forms.md`.

4. Claims lifecycle

1. FNOL — capture facts, policy verification, coverage preliminary 2. Assign adjuster; establish reserves (case, IBNR directionally—detail with actuary) 3. Investigate liability and damages; manage vendors and counsel 4. Negotiate settlement; subrogation and salvage where applicable 5. Close with file documentation; feed experience to underwriting

See `references/claims_lifecycle_and_handling.md`.

5. Reinsurance and catastrophe

1. Classify peril and geographic cat accumulation 2. Select structure: quota share, surplus, per-risk XOL, cat XOL, cat bonds (overview) 3. Align retentions and reinstatements to capital and rating agency context 4. Coordinate with pricing cat load and aggregate monitoring

See `references/reinsurance_and_catastrophe.md`.

6. Metrics, regulation, and operations

1. Compute and interpret loss, expense, and combined ratios 2. Separate attritional vs cat and large-loss development in narrative 3. Outline DOI filing, market conduct, and financial examination concepts 4. Map distribution economics (commission, MGA overrides, profit sharing)

See `references/metrics_regulatory_and_operations.md`.

Deliverable standards

Always label preliminary coverage positions and regulatory comments as not legal or actuarial advice; escalate to qualified professionals for filings, sign-off, and disputes.

When to load references

• Scope and LOBs → references/pc_insurance_scope_and_lines.md
• Underwriting → references/underwriting_and_risk_selection.md
• Policy and coverage → references/policy_coverage_and_forms.md
• Claims → references/claims_lifecycle_and_handling.md
• Reinsurance and cat → references/reinsurance_and_catastrophe.md
• Metrics and regulation → references/metrics_regulatory_and_operations.md

Claims Lifecycle and Handling

Purpose

Outline the P&C claims process from first notice of loss through closure, including reserving, investigation, litigation management, and feedback to underwriting—without substituting actuarial reserve sign-off or legal strategy.

Lifecycle overview

FNOL → coverage verification → investigation → valuation → negotiation/settlement → subrogation/salvage → closure → data feed to underwriting/actuarial

First notice of loss (FNOL)

Capture early:

• Date/time of loss and discovery date (claims-made sensitivity)
• Location, description, injuries, property damage
• Policy number, named insured, reporter contact
• Emergency mitigation (board-up, medical care)
• Law enforcement / fire report references
• Witnesses and third parties

Coverage preliminary — verify active policy, relevant coverage part, limits, deductibles, exclusions. Mark as preliminary until investigation completes.

Assignment and reserving

Reserve philosophy:

• Update as facts develop; document reasons for changes
• Separate indemnity vs expense
• Large loss and cat protocols for fast escalation

Investigation

Liability lines (GL, auto, umbrella)

• Scene inspection, statements, photos
• Liability apportionment and comparative negligence (jurisdiction-dependent)
• Medical record review for BI severity
• Expert retention (accident reconstruction, biomechanics) when material

Property lines

• Cause and origin (fire, water, wind)
• Scope of damage and repair estimate
• Business income documentation (financials, trends)
• Mitigation duty—insured must protect property from further damage

Workers compensation

• Compensability: arising out of and in course of employment
• Medical management, return-to-work, state forms
• Fraud/surveillance only per compliance and law

Litigation management

• Reservation of rights — insurer defends but may deny coverage for some theories (counsel-driven)
• Counsel panel — approved defense firms by venue
• Settlement authority — delegated limits by adjuster level
• Mediation/arbitration — alternative dispute resolution
• Bad faith — extra-contractual exposure (escalate to counsel; not legal advice here)

Settlement and payment

• Release requirements and lien resolution (medicare, workers liens—overview)
• Structured settlements for large BI (overview)
• Deductible billing or reimbursement per policy

Subrogation and salvage

• Subrogation — recover from responsible third party after paying insured
• Salvage — property recovery value offsets loss
• Waiver of subrogation endorsements affect recovery rights

Third parties

Metrics and quality

• Severity — average cost per closed claim
• Frequency — claims per exposure unit
• Cycle time — FNOL to closure
• Litigation rate — % in suit
• Customer satisfaction — where measured

Feedback loops

• Large losses and trends inform renewal pricing and appetite
• Loss run accuracy depends on valuation date and open/closed status
• Fraud referrals to SIU with documented facts

When to escalate

Deliverable: claim status summary

Minimum fields:

• Claim number, date of loss, LOB
• Facts (brief), coverage position (preliminary if needed)
• Outstanding reserves (indemnity/expense)
• Next actions and owners
• Litigation status if applicable

Metrics, Regulatory, and Operations

Table of contents

1. Underwriting and profitability metrics 2. Loss and expense components 3. Distribution economics 4. Regulatory overview (U.S. state) 5. Operations and data 6. Reporting cadence

Purpose

Provide P&C insurance KPI definitions, distribution model economics, and high-level regulatory concepts for operations and leadership reviews—not legal or actuarial sign-off.

Underwriting and profitability metrics

Loss ratio

Loss ratio = Incurred losses (including IBNR change) / Earned premium

• Incurred = paid losses + case reserve change + IBNR change
• Compare gross vs net (after reinsurance ceded)

Expense ratio

Expense ratio = Underwriting expenses / Written premium (or earned—state practice varies)

Includes acquisition (commission) and general underwriting expenses; ULAE may be treated separately in internal management reports.

Combined ratio

Combined ratio = Loss ratio + Expense ratio

• Below 100% — underwriting profit before investment income (simplified; cat years distort)
• Above 100% — underwriting loss; investment income may offset

Other common metrics

Coordinate reserve and triangle metrics with actuary.

Loss and expense components

Development — prior accident year reserves strengthening/weakening; explain in management narrative.

Distribution economics

Contingent commission — paid if loss ratio or growth targets met; disclosure and conflicts matter (compliance overview).

Surplus lines (overview)

• Non-admitted insurer; surplus lines tax and filing via broker
• Stamping office / SLIP compliance by state
• Insured disclosure and diligent search requirements (state-specific)

Regulatory overview (U.S. state)

Primary regulator: state Department of Insurance (DOI).

Concepts (not legal advice):

NAIC — standard-setting and accreditation; coordinates multi-state consistency.

Escalate filing obligations and enforcement to qualified compliance and counsel.

Operations and data

Data quality — class codes, payroll, SOV, geocoding drive pricing and cat metrics.

Reporting cadence

Boundaries

P&C Insurance Scope and Lines of Business

Purpose

Define what property and casualty insurance covers, how commercial and personal markets differ, and the major lines of business agents encounter in underwriting, claims, and distribution conversations.

Commercial vs personal

Major lines of business (LOBs)

Property (first-party)

Covers physical damage to insured property and related time-element losses.

• Buildings and BPP — structure, contents, equipment
• Business income / extra expense — indemnity for lost income or extra costs after covered physical loss
• Inland marine — movable property, contractors equipment, fine art (often separate or endorsement)
• Cat perils — wind/hail, flood (often excluded or separate), earthquake (often sublimited or separate)

General liability (third-party)

Bodily injury and property damage to others arising from insured operations or products.

• Premises/operations — slip-fall, ongoing operations
• Products/completed operations — post-sale product liability, completed work
• Personal and advertising injury — libel, slander, false arrest (defined terms in form)
• Damage to rented premises — fire/legal liability to rented space

Workers compensation

Statutory line: medical and indemnity benefits for work-related injury/illness; employer liability (stop-gap) where applicable.

• Experience rating — mod factors from loss history
• Class codes — payroll-based rating by job description
• Monopolistic states — state funds (overview only; jurisdiction-specific)

Commercial auto

Liability and physical damage for owned/hired/non-owned auto exposures.

• Liability — BI/PD to third parties
• Physical damage — comp/collision on owned vehicles
• Hired/non-owned — employees using personal or rented vehicles for business
• MCS-90 / interstate — federal filing context for motor carriers (overview)

Umbrella / excess liability

Sits above underlying GL, auto, employers liability, and sometimes other policies.

• Follow-form vs standalone — whether umbrella tracks underlying terms
• Self-insured retention (SIR) — common on excess layers for large accounts

Specialty and package

• Professional liability (E&O) — often separate from GL; claims-made common
• Cyber — first- and third-party network/privacy events (specialty form)
• D&O, EPLI — management and employment practices (often with securities claims triggers)
• Package (BOP/CPP) — combined property and liability with common declarations

Market segments

Key stakeholders

• Policyholder — named insured and additional insureds
• Producer — agent or broker placing coverage
• Carrier — risk-bearing entity (or reinsurer behind front)
• TPA / adjuster — claims handling (carrier staff or third party)
• Regulator — state Department of Insurance (DOI)

Boundaries with adjacent domains

• Actuarial — triangles, IBNR, indication math → actuary
• Legal — coverage opinions, bad faith, form filings as law → commercial-counsel
• Life/health — mortality, morbidity, ACA, group benefits — outside P&C depth here

Quick LOB selection guide

Policy Coverage and Forms

Purpose

Explain how P&C policies are structured, how coverage triggers work, and how limits, deductibles, and exclusions interact—at a conceptual level. Not legal advice; escalate disputes to commercial-counsel.

Policy anatomy

Typical commercial policy stack:

1. Declarations (dec page) — named insured, policy period, limits, premiums, form list 2. Coverage form(s) — insuring agreements, exclusions, conditions 3. Endorsements — modifications (broadening or restricting) 4. Definitions — control interpretation of insuring agreement 5. Conditions — duties after loss, cancellation, other insurance, subrogation

ISO-style forms are common benchmarks; carriers may use proprietary editions—always cite edition date and state variations.

Occurrence vs claims-made

Claims-made checklist:

• Retroactive date on dec page
• Extended reporting endorsement if non-renewing
• Prior acts coverage and ERP pricing on runoff

Limits and deductibles

Umbrella — attachment point above underlying limits; verify underlying erosion and maintenance.

Property coverage concepts

• Covered causes of loss — basic, broad, special (perils defined or open perils)
• Replacement cost vs ACV — valuation at settlement
• Business income — net income + continuing expenses; waiting period; period of restoration
• Extra expense — costs to mitigate BI
• Ordinance or law — demolition/increased cost of construction (often sublimited)
• Flood / earthquake — typically excluded or separate policy

General liability concepts

• Occurrence — accident including continuous or repeated exposure (defined)
• Products-completed operations hazard — separate aggregate often applies
• Additional insured — status via endorsement (scope varies: ongoing ops vs completed ops)
• Contractual liability — coverage for assumed liability in insured contract (with exceptions)
• Expected or intended injury — exclusion for deliberate acts

Commercial auto concepts

• Symbol system — which autos are covered (owned, hired, non-owned)
• Combined single limit vs split limits
• UM/UIM — statutory variations by state
• Hired/non-owned — employee use exposures

Workers compensation concepts

• Statutory benefits — medical, disability, death, vocational rehab (state-specific)
• Employers liability — tort claims outside comp (e.g., third-party-over)
• Exclusive remedy — general bar of suits by employees (exceptions vary)

Common exclusions (illustrative)

• Pollution (with sudden/accidental carve-backs sometimes)
• War, nuclear, terrorism (TRIA framework for certified acts—overview)
• Intentional acts
• Known injury or damage (claims-made)
• Professional services (may move to E&O)
• Fungi/bacteria, silica, lead (often limited)
• Cyber events (may require separate policy)

Endorsement patterns

Coverage analysis workflow

1. Identify form edition and state filing 2. List triggers and exclusions for the loss fact pattern 3. Map limits/deductibles and which apply 4. Check other insurance and additional insured status 5. Document coverage position as preliminary; flag counsel review for denials

Integration points

• Actuary — loss cost assumptions by coverage part
• Claims — reservation and coverage letters
• Counsel — reservation of rights, duty to defend (jurisdiction-specific)

Reinsurance and Catastrophe

Purpose

Explain how P&C carriers transfer risk to reinsurers, common treaty structures, and catastrophe accumulation concepts—at overview level for underwriting, finance, and strategy discussions.

Why reinsurance

• Capacity — write larger limits than net retention
• Stability — smooth results against large or cat losses
• Capital — support rating agency and regulatory capital metrics (coordinate with actuary)
• Expertise — facultative support on unusual risks

Treaty types (proportional)

Quota share

• Reinsurer takes a fixed percentage of premium and losses on defined book
• Ceding commission compensates cedant for acquisition/expense
• Used for new ventures, capacity relief, or MGAs

Surplus share

• Reinsurer takes portion above retention per line (property schedules common)
• Multiple lines (facultative automatic lines) possible

Treaty types (non-proportional)

Per-risk excess of loss (XOL)

• Reinsurer pays losses above retention per risk (e.g., $500K xs $500K)
• Applies to large single losses, not aggregate cat (unless structured)

Catastrophe XOL

• Covers aggregate losses from a defined cat event above retention
• Often structured in layers (e.g., $10M xs $10M, $20M xs $20M)
• Hours clause and geographic definition of event
• Reinstatement premium if layer exhausted and coverage restored

Aggregate XOL

• Protects accumulation of losses in period (not necessarily single event)

Stop loss

• Protects combined ratio or loss ratio above threshold on a book

Facultative reinsurance

• Facultative — individual risk submission when treaty capacity insufficient or risk unusual
• Common for property values above treaty capacity, difficult liability risks

Fronting and captives (overview)

• Fronting carrier issues policy; reinsurer or captive assumes most risk via agreement
• Requires strong trust, collateral, and regulatory compliance—not legal advice

Catastrophe modeling (overview)

Cat models estimate probable maximum loss and average annual loss by peril:

Model output feeds:

• Cat load in pricing
• Aggregate monitoring — PML, tail scenarios
• Reinsurance buying — attachment and limit selection

Key terms

Buying workflow (simplified)

1. Set risk appetite and net retention by LOB 2. Run exposure data (geocoded locations, values, construction) 3. Model gross and net cat scenarios 4. Structure treaty program with brokers/reinsurers 5. Negotiate terms (hours, definitions, reinstatements, commissions) 6. Document in slip/treaty; track bordereaux and ceding accounting

Integration with underwriting

• Property schedules drive surplus and cat needs
• Liability spikes (umbrella, railroad, etc.) may need fac or higher XOL
• MGA programs often have quota share behind capacity provider

Boundaries

• Sign-off pricing and statutory statements → actuary
• Contract wording and disputes → commercial-counsel
• Primary policy flood/cat exclusions → policy_coverage_and_forms.md

Underwriting and Risk Selection

Purpose

Describe how P&C carriers and MGAs evaluate risk, structure terms, and decide whether to quote, decline, or refer—without replacing actuarial pricing models or legal review of binders.

Underwriting workflow (typical)

submission → clearance (appetite) → data gathering → risk evaluation → pricing → terms → quote → bind → endorse/audit

1. Submission intake

Common inputs:

• Application (ACORD or proprietary)
• Five-year loss runs (valued date matters)
• Statement of values (SOV) for property
• Financial statements (mid-market and up)
• Vehicle schedules, driver lists, MVRs (auto)
• Payroll and class code breakdown (WC)
• Prior policies and dec pages (renewals)
• Inspection/photos, engineering reports (property-heavy)

2. Appetite and clearance

Appetite — classes, geographies, limit profiles, and hazard grades the carrier will write.

Declination triggers (examples—carrier-specific):

• Prohibited class (e.g., certain explosives, unapproved cannabis operations)
• Loss history above threshold
• Unacceptable life-safety or moral hazard
• Capacity or aggregation limits in territory

Referral — authority above underwriter grade (large limits, unusual operations, poor loss trend).

3. Risk evaluation dimensions

4. Rating and pricing (overview)

• Manual rates — filed or proprietary base rates by class/territory
• Modifications — experience mod (WC), schedule credits/debits, individual risk rating
• Expense and profit load — commission, acquisition, ULAE/ALAE allowances
• Cat load — modeled or benchmark charge for catastrophe-exposed property
• Target loss ratio — expected losses as % of premium after reinsurance ceded

Coordinate detailed indication and triangle work with actuary.

5. Terms and conditions

6. Quote, bind, and service

• Quote letter — limits, premium, effective dates, conditions
• Binder — temporary evidence of coverage pending policy issuance
• Policy issuance — dec page, forms list, endorsements attached
• Mid-term changes — endorsements, audits (WC/premium audit), cancellations

Personal lines nuances

• Telematics and credit-based insurance scores (where permitted)
• Home characteristics: year built, construction, roof age, protection class
• Auto: driver age, violations, garaging, usage

Commercial lines nuances

• Account rounding — packaging GL, property, auto, umbrella for mid-market
• Large account — facultative reinsurance, manuscript wording, risk engineering
• Programs — master policy, certificates, uniform underwriting rules

MGA and program underwriting

• MGA underwrites within binding authority from carrier
• Carrier sets appetite, limits, and claims guidelines; MGA handles distribution and ops
• Oversight: audits, loss ratio targets, collateral or profit-sharing

Documentation standards

Underwriting file should retain:

• Rationale for credits/debits and limit selection
• Referral approvals
• Subjectivity clearance
• Version of application and loss runs used

Red flags (non-exhaustive)

• Unreported losses or material misrepresentation
• Rapid prior carrier changes
• SOV values materially below replacement cost
• Uninsured subcontractors (GL/WC gap)
• Open hot work or life safety violations without remediation plan