Ad Hoc revision Flashcards
C1 - If a bank becomes an intermediary how is cover usually branded?
In their own name
C3 - What is it called when management investigates a variance in or over 3%
Management by exception
What is covered under risk assessment?
Risk analysis (risk identification, description & estimation)
Risk evaluation
What are the 3 main types of assets?
premiums
shareholder funds
claims reserves
What do directors need to do if they conclude that compliance with accounting standards and conflict with the requirement is true and fair?
To depart from the accounting standard, with detailed disclosure of the nature, reasons, and impact of the
departure
The uncertainty over setting an appropriate level of claims reserve is influenced by a number of factors, WHAT ARE THESE?
- legislative change in the future having a retrospective impact on existing claims;
- future claims payment patterns differing from historical experience;
- claims, such as stress and disease claims, emerging from risks written many years ago;
- cases of latent exposures such as asbestos being reported (for example, cases of
mesothelioma can have a latent period of up to 40 years); - the outcome of litigation on existing claims;
- failure to recover reinsurance;
- unanticipated changes in claims inflation; and
- unexpected changes to the interest rates (Ogden rate) applied by courts on personal
injury claims
The ‘incurred but not reported’ test is important for insurers because it?
calculates the likely claims costs in a particular financial reporting period.
How is information on claims usually gathered?
Information on claims is generally gathered by incident year
The organic growth of a UK insurer is most likely to be best for the business because it
often offers a better investment return
What is LEAST likely to be a reason for a UK insurer to consider outsourcing some of its UK operations
To reduce regulatory requirements
Whats the process if a firm breaches the MCR?
regulatory action is taken and the firm must submit a plan for
approval, explaining how it will restore
capital above the MCR within three months.
what are the two methods of the solvency ratio?
total eligible capital / solvency capital requirement
net assets / earned premium net of reinsurance
Under Solvency II, UK authorised insurers should be aware that they must meet both the solvency capital requirement and the minimum capital requirement…
at all times.
Which body is currently the UK’s main independent regulator of corporate financial reporting and governance
Financial Reporting Council
An insurer would use forecasting as a part of its budgeting process to
plan its future need for capital resources
