B
PROPOSAL FORMS
The proposal form is the most common mechanism by which the insurer receives information about risks to be insured. In most classes of insurance a proposal form is completed by the proposer and submitted to the insurer. These forms may be requested from an insurer direct or could be provided by a broker or intermediary.
In the past the proposal form also acted as a form of advertising and there is still an element of this today. However, advertising is much more sophisticated now and the proposal form is less likely to be the only, or even the main, form of advertising.
There are certain classes of insurance for which proposal forms are not normally required. The main examples of this are fire and marine insurance. In the case of fire insurance the actual details of the risk could be so complex that it would be impossible to confine them to a proposal form. It would be very difficult to describe a large manufacturing plant on a proposal form or to list hundreds or possibly thousands of premises which a company may own or occupy. For these and other reasons the insurers will often use their own risk surveyors to visit premises or to discuss risks with proposers. Brokers play an important part in this process. The broker often prepares full details of a risk for an insurer, in a form which can be used by the insurer. This saves both the insurer and the proposer a great deal of time and allows the risk to be presented in a form which can be readily understood by the insurer.
In marine insurance, other than the insurance for certain smaller crafts, it is not common for a proposal form to be used. A broker, acting for a proposer, would normally describe the risk and take the ‘slip’ containing the details of the underwriter at Lioyd’s.
Rather than look at proposal forms for every single form of insurance which is offered, we will look at two examples and attempt to draw some general conclusions. You would find it valuable to obtain a number of other proposal forms in order to confirm that the general conclusions apply.
The proposal forms are illustrated in Appendices 1 and 2 to this chapter. They are for private car insurance and liability insurance. The private car proposal would obviously be used by an individual seeking insurance, while the liability proposal form would be completed by an organization of some kind.
Looking at these two forms, and any others you may have been able to obtain, we can draw a number of conclusions: