7 Underwriting Flashcards

1
Q

Exposure modelling

A

Concentration of exposure in one area. Eg. Stock throughout at warehouses. Property. Satellites. Can look down to postcode of each risk.

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2
Q

Loss modelling

A

Financial impact of certain events. Use Realistic Disaster Scenarios RDSs and assess gross vs net exposure (accounting for reinsurance)

Lloyds gives specific scenarios that all syndicates must analyse

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3
Q

Catastrophic modelling

A

Financial losses

Also non financial - staff requirements etc

considers frequency and severity

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4
Q

Law of large numbers

A

Easier to calc premium as lots of data

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5
Q

Premium base

A

what you’re applying the rate to

for liability insurances it is different

Employee liability - payroll

Product or public - turnover

Professional I - fees

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6
Q

Bipar

A

Not align premium upwards

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7
Q

Who agrees capacity of insurer

A

regulator

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8
Q

Why an insurer wouldn’t take 100% risk

A

Capacity, appetite, aggregations, broker influence, insured’s influence

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9
Q

Aim of electronic processes

A

Easier to do business, more accessible to customers, more cost effective and efficient services

Can reduce operating costs and therefore cheaper premiums for clients

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10
Q

Average operating cost of insurers

A

30-40%

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11
Q

Role of rating agency

A

Assessing how likely it is that an insurer can pay future claims. They consider financial position, management, business operations

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12
Q

Why are brokers concerned about ratings

A

If insurer unable to pay claims, might be found negligent

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13
Q

What does Principle 3 of Underwriting Profitability state

A

Expectation that leaders do pre bind analysis on all risks, and followers will do a sample

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14
Q

Insurance Act 2015 - knowledge of brokers

A

knowledge of brokers is deemed to be held by their client so must be disclosed

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15
Q

Probable maximum loss PML

A

what is the realistic likely maximum loss? use this to work out how much reinsurance you need

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16
Q

premium per cent vs premium per mille

A

cent - per GBP 100m, mille - per GBP 1000m

17
Q

what does ‘open cover’ mean in marine cargo or stock throughput

A

it is where you declare exposure via declarations / charge premium in stages against actual values

18
Q

how do insurers calculate a premium rate

A

consider operational costs, reinsurance costs, profit margin, contribution to claim reserves, taxes if applicable

19
Q

how do insurers reserve

A

larger claims - individually

for high frequency low severity like motor, blanket reserves across entire book of business

20
Q

what do claims adjusters consider

A

country of risk where legal proceedings take place / what is likely amount to be awarded / is it more expensive to go to court here

21
Q

reserve for personal injury claims

A

0.25% extra

22
Q

why do insurers not want to reserve full policy limits

A

reserves are liabilities so mean they need more capital to balance out solvency equation

23
Q

IBNER

A

incurred but not enough reported - where claims are known but currently posted reserve is not adequate

24
Q

situs funds / trust funds

A

some regulators require insurers to keep funds in that particular country’s borders.