Principle
The managing agent has appropriate pricing methodologies and effective rate monitoring processes.
Minimum standards
Appropriate pricing and effective rate monitoring processes incorporate:
- a demonstrable and transparent pricing policy.
View guidance on appropriate pricing processes.
- measurement of the difference between the actual price charged against the benchmark price established by the managing agent.
View guidance from CALM (market actuaries) regarding Benchmark Pricing.
- measurement of pricing movements from the previous year for renewal business.
- analysis of the impact of non-renewed business on the current portfolio.
- written guidelines setting out the principles to apply in the quantification of pricing movements to ensure consistency of approach between underwriters.
- information to be recorded by underwriters with regular internal reviews and checks for data quality.
- assignment of responsibility for assessing and calculating the impact that pricing movements, new business and non-renewed business may have on the syndicate loss ratios to a nominated director.
View guidance on effective rate monitoring processes.
View additional notes on pricing and rate monitoring.
For the avoidance of doubt, the Franchise Board will use performance management data gathered from managing agents for the purposes of effective and efficient prudential supervision but it will not use such data for the purposes of instructing managing agents as to the pricing of individual risks in any given instance.
