THE CHARTERED

INSURANCE INSTITUTE

Commercial property and pecuniary 750

insurances assessment and underwriting
(incorporating construction and
engineering insurance)
Objective: To provide a knowledge and understanding of the principles and practices of risk
assessment and underwriting in relation to property, pecuniary, construction and engineering
insurances, including the role of surveyors and inspection services.
Knowledge Knowledge
rating rating

Risk control, improvement and Methods of protecting property from lightning damage. 1
Explosion hazards of flammable liquids and gasses and methods
loss prevention of reducing such risks. 2
Advisory bodies Hazards of dust explosions and the reduction of these risks. 2
Role of the Loss Prevention Council. 1 Hazards arising from perils of storm, flood, burst pipes and
Functions and aims of other organisations including Association subsidence and their control. 2
of British Insurers, Fire Research Station, National Approval Theft
Council for Security Systems, British Standards Institution,
Arson Prevention Bureau, Comité Européen des Assurances and Nature of theft risks including area, type of property and security. 3
International Organisation for Standardisation. 1 Pattern of theft losses. 2

Hazard, risk control and improvement Criteria for security surveys. 2

Role of surveyors in risk control and improvement. 2 Nature of perimeter protection, surveillance, access control and
security guards. 2
Physical and moral hazard and their application to property and
pecuniary insurances. 2 Nature of door and window construction and protection. 2

Methods of remedying and improving moral hazards. 2 Types of and use of intruder alarms. 3
Selection and use of safes. 2
Fire and associated perils
Protection of cash in transit. 2
General causes of fire and the fire triangle. 1
Protection of vehicles and goods in transit. 2
Relationship of fire inception and propagation hazards and
fire load. 2 Surveying
Problems of smoking, electrical apparatus and arson for Objective of survey request to:
fire insurers. 2
—provide assessment of risk; 2
Concept of a fire risk. 2
—improve commercial features of risk; 2
Spread of fire through conduction, convection and radiation. 2
—offer improvement benefits to all parties; 2
Problems of multi-tenure buildings, fire inception, propagation,
protection and improvement. 2 —develop loss prevention programmes. 2
Heating and industrial processes as causes of fire. 2 Risk assessment — property and pecuniary insurance
Spontaneous combustion as a cause of fire. 2 Use of surveys and basic content of survey and interruption reports. 2
Relative fire hazards of materials used in industry. 2 Calculation of EML (Estimated Maximum Loss) and insurer’s liability. 3
Relative fire hazards of building construction and materials. 2 Main underwriting considerations. 3
Methods of fire protection including upgrading of construction Standard risk profiles and deviations therefrom. 2
and use of LPC standards for fireproof walls, floors and doors, Interpretation of survey and interruption reports. 2
and the provision of fire extinguishers, alarms, sprinklers,
Basic systems of checking fidelity risks, including the use of
drenchers and private fire brigades. 2
references, employer’s and employee’s forms and survey of
Methods of protection of computer suites. 2 computer procedures. 2

Technical module 1
 Knowledge Knowledge
rating rating
Underwriting — property insurance Risk assessment and underwriting in relation to
Criteria for acceptance or declinature of risks. 2 contract guaranteed. 2
Application and use of terms in underwriting decisions Risk assessment and underwriting in relation to civil
including warranties, excesses, franchises and deductibles. 3 engineering completed risks. 2
Theory of rating insurance including classification, discrimination
and experience and interruption insurance basis rates. 3
Business interruption relating to
Methods of calculation of premiums. 2 engineering and construction insurances
EMLs and acceptance limits and insurers’ use of co-insurance Engineering business interruption insurance risk assessment,
and reinsurance. 2 risk management and underwriting. 3
Application of proportional and non-proportional methods Risks insured under advance covers for loss of profits, rent and
of reinsurance. 3 interest for principals. 2
Uses of resurveys and post-loss surveys. 2 Construction business interruption risk assessment, risk
management and underwriting. 3
Construction insurance Knowledge ratings
(including erection ‘all risks’) Each sub-topic has been designated a numerical knowledge rating as follows:
Risks insured, risk assessment and underwriting 1 General background awareness necessary.
of construction projects and machinery erection risks 2 Requires a knowledge of the major elements of procedures or concepts
Typical risks and main causes of loss or damage. 3 and their uses.
Operational testing, commissioning and maintenance risks. 3 3 Requires the ability to evaluate concepts, issues, policies and
Underwriting of: procedures, together with an understanding of associated aspects of
these items and their application to various situations.
—annual contracts and single contracts, machinery erection
and contractors’ plant/equipment risks; 3
—PFI projects; 2
—annual and individual project employers’ liability and public Study materials
liability risks; 2
The following list provides details of various publications which may assist
—JCT 21.2.1 cover; 2 with your studies. The primary text for this syllabus is shown in bold type.
—terrorism risks in the United Kingdom; 2 Periodicals and publications listed as additional reading will be of value in
ensuring candidates keep up-to-date with developments and in providing
—overseas risks. 1
a wider coverage of syllabus topics. The reference materials cited are
Risk management and surveys including employers’ liability, authoritative, detailed works which should be used selectively as and
public liability, JCT 21.2.1, contractors’ ‘all risks’ and when required.
construction ‘project’ insurance surveys. 2
Most of these additional study materials can be borrowed or purchased
Joint Code of Practice for fire prevention on building contracts. 2 from the CII library.
Application of reinsurance. 2
Primary text
Engineering insurance Coursebook 750: Commercial property and pecuniary insurances
assessment and underwriting (incorporating construction and engineering
Risk insured, risk assessment and underwriting insurance). The Chartered Insurance Institute.
of inspected classes
Inspection of engineering plant and machinery. 3 Additional reading
Surveys. 3 Fire Prevention Handbook. Derek James. London: Butterworths, 1986.
Boiler and pressure plant: Principles of security surveying. George Scott. Borehamwood: Paramount
Publishing, 1988.
—typical items of plant and main causes of loss or damage; 3
Construction insurance: management and claims. R. J. Hickson. London:
—risk assessment and underwriting. 3
E&FN Spon, 1987.
Electrical and mechanical plant:
Construction insurance and UK construction contracts. Marshall Levine,
—typical items of plant and main causes of loss or damage; 3 Jeremy Wood: Lloyd’s of London Press, 1991.
—risk assessment and underwriting. 3 Contractor’s all risks insurance. F. N. Eaglestone, London: Chartered
Lifts, cranes and handling plant: Institute of Loss Adjusters, 1993.
—typical items of plant and main causes of loss or damage; 3 Insurance under the ICE contract. F. N. Eaglestone, C. Smith. London:
—risk assessment and underwriting. 3 George Goodwin, 1985.

Engineering and its potential effect on the environment. 2 Insurance under the JCT forms. 2nd edition. Frank Eaglestone: Blackwell
Science Ltd, 1996.
Application of reinsurance. 2
Construction and erection insurance. Advanced Study Group Report No
Risk insured, risk assessment and underwriting 208B of the Insurance Institute of London. London IIL, 1999.
of non-inspected classes Introductory guidance to insurance under JCT contracts. Royal Institution
Computers. 2 of Chartered Surveyors, London, Surveyors Holdings Ltd. 1991.
Machinery movement. 2 Practice Note 22 and guide to the amendments to the insurance and
Deterioration of stock. 2 related liability provisions. 1986.
Miscellaneous plant. 2 Joint Contracts Tribunal for the Standard Form of Building Contract.
London. RIBA Publications, 1987.
Risk assessment and technical inspection in relation to latent
defects insurance. 2 Periodicals
Risk assessment and underwriting in relation to professional The Journal. London: The Chartered Insurance Institute. Six issues a year.
indemnity insurance. 2
Post Magazine. London: Timothy Benn. Weekly.

2 Technical module