Munich Re’s Auto Carve-Out

Rob Barnett, SVP and Casualty Underwriting Manager for Munich Re America’s casualty lines national accounts division, believes that innovation is the key to success for reinsurers in the current market.

He supplied this explanation of one of his company’s new offerings—an auto-carve out for umbrella policies—to Carrier Management:

• Munich Re is actively entertaining proposals to carve out the auto liability from the lead umbrella for both general books of umbrella/ excess business and for auto specialists.
• This product, “Auto Carve-out” (ACO), is underwritten using a facultative program approach.
• An underwriting box is developed jointly with the client, and a unit rating approach to the pricing is implemented for the client’s ease of use. Unit rates are broken down by type of unit and by territory.
• The typical attachment point is $1 million ground up, and the maximum limit provided is generally $5 million. Munich Re prefers to underwrite this product on a quota-share basis.
• Munich Re will work with clients that have supported or unsupported umbrella/ excess portfolios.

Barnett says client advantages include a less volatile umbrella/excess portfolio. In addition, the underwriting box and unit rating approach provide discipline for the auto liability line of business within the umbrella/excess unit.