Underwriting Guidelines - Small Group: Fill & Download for Free

It dependsA company can offer a national plan which eliminates the need to keep track of multiple states’ rules, notifications and underwriting guidelines. All employees receive the same group health insurance regardless of where they live, and no one is left out when it comes to coverageSeparate plans for employees in different statesA health reimbursement planHealth insurance for companies with employees in multiple statesIf buying marketplace plans, an employer will enroll in a Small Business Health Options Program (SHOP) plan in the state where your primary business site is located. They can then offer one single health plan (a national plan) or a plan specific to each state where employees live. SHOP insurance for businesses in multiple statesFrequently Asked Questions re: multi state employers and the Marketplace

Certainly.Happens all the time.In particular, alert agents will identify a special market which is under-served, or poorly served, by the insurance industry. Here’s how it works:The agent has several clients whose operations don’t fit well into the main-stream insurance product mix, when insured one at a time. However, if many similar businesses can be handled as a group, the risk becomes more attractive and more manageable.Agent pieces together the standard insuring forms which apply, then creates endorsements or policy forms which address whatever is special about risks.Agent samples the companies she represents, to test the interest of company underwriters. If she gets a positive response, she visits the company and lays out program details: coverages, pricing, underwriting guidelines. And often, agent will request underwriting authority, such that she simply tells the company to issue the policy, they rubber-stamp her approval and issue the contract. Very efficient and speedy, that way.Agent, sometimes with company collaboration, now spins up a marketing program to reach as many potential clients as possible through trade publications, trade shows and licensing of other agencies. In effect, the agent becomes a “company.”Case Histories:Mike F., underwriter at a large regional agency, is a fan of white-water rafting, a recreational activity normally served by “outfitters” and rafting enterprises along the banks of rivers with exciting rapids and challenging rocky passages. Because he pursues this sport nationally, himself, he is an expert on assessing risk, and is even involved in the qualifying rounds for the Olympics. And he recognizes that many of the small businesses who cater to this activity have coverage which is most deficient. So, he puts together an attractively priced program for the businesses, produces a convincing narrative of the risks involved, and “sells” his program to an insurance company. Presto! A new insurance product is born.Richard Z., agent at a large brokerage, has managed to pick up a few clients who are in the “event” business. The people who erect big tents, set up banquet tables, etc. But every time he gets a case, he has to “reinvent the wheel,” dragging company underwriters, kicking and screaming, through the process to get a policy written. So Richard takes 2 weeks to visit all the event operators in his area to poll them as to their biggest insurance problems, costs and claims history. And what he discovers is that the business, for the most part, is pretty clean. So he puts together a “program” for them, and sells it to an insurance company.The above case histories are true and actual. There are hundreds, if not thousands, of such programs on the market as we speak.In general, successful creation and implementation of such agent or broker programs relies on the following:The broker has some special interest or expertise on the nature of the business.No current program to serve policyholders exists.Broker is familiar with or has access to any legal or statutory provisions which impact on the probable outcome of court cases.Broker has access to policyholder claims history (“loss runs”).Broker has recognized credentials as an insurance professional.Broker has access to insurance markets. That leaves OUT Allstate, State Farm and similar, whose preference is “plain vanilla.”I hope this answers your question.

Answering for consumers located in the United States. Before The Great Depression, loans did not amortize. First, a short history lesson.The earliest thrift institutions began with a simple idea: “a group of neighbors pooled their savings and, as money accumulated, each member of the group in turn received funds to buy a house. These early groups filled unmet needs. In nineteenth-century America, banks concentrated on commercial and agricultural accounts. In those days banks did not cater to individual savers with small accounts, and they generally did not make home loans. In order to buy a house, a person had to borrow from a wealthy individual or save the entire purchase price. People hoarded savings at home because there was no other convenient place to save.Modeled after building societies begun in England during the 1770s, savings and loan association members paid an initial contribution of $5 into the pool and pledged to continue depositing $3 per month thereafter until all members had obtained the funds they needed. These new associations were called “savings and loan” or “building and loan” associations. They were safe places for individuals to deposit their savings, plus they provided mortgage loans within the immediate community.Thrifts continued extending one-year mortgages to homebuyers. The full amount of a mortgage came due in one balloon payment at the end of one year. If a customer could not repay a loan, the thrift simply created a new mortgage. They provided much of the financing of homes before the 1930s.Prior to The Great Depression, the loans that were made had 40-50% loan-to-value ratios and maximum terms of three to five years with interest payable twice a year. Non-amortization of loans and semi-annual payment of the interest were major reasons for many commercial and residential loan foreclosures during The Great Depression.”Direct and indirect government involvement the United States began only with the onset of the Great Depression of the 1930's. “From 1925 through 1929 more than 3,400 banks failed. In 1932, President Herbert Hoover created the Reconstruction Finance Corporation. Reacting to the hysteria sweeping the country, many mortgagees voluntarily instituted foreclosure moratoria, some for as long as two years. President Franklin D. Roosevelt signed The New Deal. The Emergency Banking Relief Act of 1933 gave President Roosevelt the authority to regulate banking transactions and foreign exchange and to reopen solvent banks.”Federal Housing Administration (FHA)Source: U.S. Department of Housing and Urban Development (HUD)“When FHA was created in 1934, its primary objectives were 1) to encourage improvement of the nation’s housing standards and conditions; 2) to provide an adequate home financing system; and 3) to exert a stabilizing influence on the mortgage and residential real estate markets. The first objective, to improve the housing standards and conditions, was very vital. In 1933, cities and counties did not have sophisticated building departments or zoning restrictions. Houses were built very haphazardly wherever land was available, with very little control as to size or type of construction. If an investor were interested in purchasing loans made in another area, he had no assurance as to the quality of the security. The minimum property standards imposed by FHA gave assurance to the lender or the investor that the security for the loan was a property that was safe, sanitary, and structurally sound. These three are still the basis of property standards for FHA loans today.FHA established standards the lender had to meet in order to be eligible for participation in the program. This further reduced the investor’s risk, by assuring that the lenders met prudent lending standards and were financially stable. The expansion of the concept of loan amortization and underwriting of the applicant’s qualifications as to credit and income stability was to provide a system whereby lenders in capital rich areas would purchase loans made in the capital poor areas.The investor’s risk was further reduced by the lenders’ need to establish more efficient loan administration (servicing) departments. The amortizing monthly payments and the FHA required reserve (escrow) accounts made loan administration an important part of the mortgage lenders’ operations. This provided tighter control over the security and the borrower, reducing the risk to the investor. Mortgage portfolios became more liquid as holdings of FHA loans increased, for such loans were readily marketable. Institutional lenders were in a position to commit larger percentages of deposits and assets to mortgage loans because FHA loans could be termed low risk assets.Establishing uniform property and credit underwriting standards provided assurance that both the property and the borrower met these standards. These requirements, combined with the government insurance, greatly reduced the risk to the lender. FHA established the foundation upon which our current mortgage lending industry has been built.”Jillayne here:A 30-year fixed rate amortized loan in 1934 meant that people could pay as agreed for 30 years and eventually own the home free and clear. People got married at a younger age because of the lack of available birth control options. My dad (born in 1935) tells me that he was deathly afraid of getting a girl pregnant, so getting married was how you could safely have sex as an 18 year old! Look at it this way: Married at 20, buy a home, have kids, and people also lived shorter lives back then. You retired at age 50 and could entire retirement mortgage-free.The 30 year fixed rate mortgage was never meant to be refinanced over and over again. It was created to be paid in full after 30 years.IMPORTANT:The original FHA underwriting guidelines, written in 1934, did not allow for FHA loans to be offered in racially segregated neighborhoods. FHA loans were only offered in white neighborhoods. (Source: The Color Of Law by Richard Rothstein. Liveright Publishing, NY. 2017. Page 50.)Richard Rothstein’s book comes with my highest recommendation.When The Fair Housing Act was passed in 1968, the above^ (redlining or steering) became illegal. Yet banks still refused to loan money in the racially segregated neighborhoods. It was only when the Home Mortgage Disclosure Act was passed in 1974, and banks were required to ask all applications their race, ethnicity, and gender, so the regulators could hold the banks accountable to lend in ALL neighborhoods, did banks finally start offering FHA loans in the racially segregated neighborhoods. But wait, there’s more.Each year, HUD and The CFPB continue to hold banks accountable for failing to lend in the racially segregated neighborhoods. The worst recent case is against Bancorp South.