Fire & Property All Risk - Endorsements¶

Endorsement Types¶

Common Mid-Term Changes¶

Sum Insured Changes
Increase property value
Decrease property value
Add new property items
Remove property items
Location Changes
Add new location
Delete location
Change property address
Coverage Modifications
Add perils (Fire policy)
Remove perils (Fire policy)
Add optional extensions
Change deductibles
Property Details Updates
Change occupancy type
Update construction details
Add fire protection measures
Add security features
Mortgage Changes
Add mortgagee interest
Remove mortgagee
Update bank details
Cancellation
Property sold
Coverage no longer needed
Non-payment

Premium Adjustments¶

How Endorsement Premiums Are Calculated¶

For Sum Insured Increases: - Additional premium = Increase × Rate × Time Factor - Pro-rated for remaining policy period

For Sum Insured Decreases: - Return premium = Decrease × Rate × Time Factor - Pro-rated for remaining period - Subject to minimum retention

For Coverage Additions: - Additional premium quoted separately - Based on full annual premium × time factor

For Coverage Deletions: - Return premium based on peril rate - Pro-rated for remaining period

Time Factor:

Time Factor = Days Remaining ÷ 365

Cancellation and Refunds¶

Refund Methods¶

Short-Period Rate Method¶

For early cancellations:

Period Active	Premium Retained	Refund
Up to 1 month	25%	75%
1-3 months	50%	50%
3-6 months	75%	25%
6+ months	100%	0%

Note: Fire and property policies use short-period rates due to higher risk exposure in early months.

Pro-Rata Method¶

For specific cases: - Property sold mid-term - New insurance arranged elsewhere - Material change in risk

Formula:

Refund = Premium × (Days Remaining ÷ Total Days)

When Pro-Rata Applies: - Property ownership transfer - Mortgage redemption requiring cancellation - Demolition or major reconstruction

Refund Processing¶

Cancellation request received
Refund method determined (short-period or pro-rata)
Premium adjustment calculated
Refund processed
Commission adjusted accordingly

Endorsement Workflow¶

Processing Steps¶

1. Request Initiation - Change request received - Type of endorsement identified - Documentation collected (if required)

2. Assessment - Impact on coverage evaluated - Premium impact calculated - Property inspection required (for material changes) - Underwriter approval if needed

3. Approval - Standard changes: Auto-approved - Material changes: Underwriter review - Major changes: Senior approval required

4. Issuance - Endorsement document generated - Policy updated - Customer notified - Premium/refund processed

Business Rules¶

Sum Insured Increases¶

Up to 20% increase: - Additional premium calculated - May not require property inspection - Pro-rated for remaining period

Above 20% increase: - Property inspection required - Underwriting review needed - May need updated valuation report - Treated as material change

Sum Insured Decreases¶

Restrictions: - Cannot decrease below actual property value - Underinsurance warning issued - Average clause implications explained

Processing: - Return premium calculated - Pro-rated for remaining period - Subject to short-period minimum retention

Add/Delete Locations¶

Adding Locations: - Each location assessed separately - Photos required for new location - Additional premium calculated per location - May affect multi-location discount

Deleting Locations: - Return premium for deleted location - Pro-rated for remaining period - Multi-location discount recalculated

Occupancy Changes¶

Material Changes: - Residential to commercial - Commercial to industrial - Adding hazardous activities

Processing: - Underwriter approval required - Property inspection needed - Premium recalculated from change date - May result in additional premium or return premium

Add/Remove Perils (Fire Policy)¶

Adding Perils: - Premium for new peril calculated - Pro-rated for remaining period - Earthquake/flood may require inspection

Removing Perils: - Not generally permitted mid-term - Creates coverage gaps - Usually only on renewal

Deductible Changes¶

Increase Deductible: - Return premium calculated - Immediate effect - Cannot change during active claim

Decrease Deductible: - Additional premium charged - Underwriter approval needed - Pro-rated for remaining period

Mortgage Endorsements¶

Add Mortgagee: - No premium impact - Bank details added to policy - Mortgagee interest noted - Usually free of charge

Remove Mortgagee: - Loan repaid - No premium impact - Documentation required (loan closure letter)

Cancellation Rules¶

Voluntary Cancellation¶

Notice Period: - 7 days notice required - Effective from date requested or notice date + 7 days

Refund Calculation: - Short-period rates apply - No refund if over 6 months expired - Minimum retention applies

Property Sold¶

Pro-Rata Refund: - Effective from sale completion date - Sale deed required - Pro-rata refund calculated - New owner can request policy transfer

Non-Payment Cancellation¶

Process: - Payment reminder sent - 15 days grace period - Cancellation notice issued - No refund of premium

Commission Impact¶

On Additional Premium¶

Commission paid on additional premium
Same percentage as original policy
Credit note issued to broker

On Refunds¶

Commission clawed back on refunded premium
Short-period or pro-rata method used
Debit note issued to broker

Common Scenarios¶

Scenario 1: Property Value Increase¶

Original sum insured: AED 1,500,000
Increase needed: AED 300,000
New sum insured: AED 1,800,000
Time remaining: 6 months (182 days)
Original rate: 0.15%

Calculation:

Additional Premium = AED 300,000 × 0.15% × (182 ÷ 365)
                   = AED 450 × 0.499
                   = AED 224.50
Premium with VAT   = AED 235.73

Scenario 2: Add New Location¶

Existing policy: 1 villa (AED 1,500,000)
Add second villa: AED 1,200,000
Time remaining: 8 months (243 days)
Rate for new location: 0.15%

Calculation:

Location Premium   = AED 1,200,000 × 0.15% × (243 ÷ 365)
                   = AED 1,800 × 0.666
                   = AED 1,198.80
Premium with VAT   = AED 1,258.74

Scenario 3: Property Sold (Pro-Rata Refund)¶

Original premium: AED 900
Policy period: 365 days
Active period: 4 months (120 days)
Days remaining: 245 days

Calculation:

Pro-Rata Refund    = AED 900 × (245 ÷ 365)
                   = AED 900 × 0.671
                   = AED 603.90

Scenario 4: Voluntary Cancellation (Short-Period)¶

Original premium: AED 5,000
Active period: 2 months
Short-period rate: 50% retained

Calculation:

Premium Retained   = AED 5,000 × 50%
                   = AED 2,500
Refund            = AED 5,000 - AED 2,500
                   = AED 2,500
Commission Clawback = AED 2,500 × Commission %

Scenario 5: Change from Residential to Commercial¶

Original premium: AED 1,500 (residential rate 0.15%)
New occupancy: Commercial office
New rate: 0.20%
Sum insured: AED 2,000,000
Time from change: 6 months remaining

Calculation:

Original pro-rata  = AED 1,500 × (183 ÷ 365) = AED 752
New premium        = AED 2,000,000 × 0.20% × (183 ÷ 365) = AED 2,004
Additional Premium = AED 2,004 - AED 752 = AED 1,252
Premium with VAT   = AED 1,314.60

Valuation Endorsements¶

Update Valuation Basis¶

Change from Indemnity to Reinstatement: - Additional premium charged - Based on difference in rates - Property inspection may be required - Pro-rated for remaining period

Change from Reinstatement to Indemnity: - Return premium calculated - Usually not permitted mid-term - Creates underinsurance risk

Special Endorsements¶

Add Earthquake Coverage¶

Additional rate: +0.05% to +0.15%
Based on seismic zone
Pro-rated for remaining period

Add Flood Coverage¶

Additional rate: +0.05% to +0.20%
Based on flood risk assessment
Property elevation considered

Add Terrorism Coverage¶

Additional rate: +0.10% of sum insured
Subject to capacity availability
May require separate policy

Next Steps¶

Commission - Commission structure
Premium Calculation - Base premium
Quote Requirements - Initial requirements