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Intros To Act Sci > Ch 8 General Insurance > Flashcards

Ch 8 General Insurance Flashcards

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1
Q

What are perils

A

This is a risky event such as fire and floods that cause loss to happen

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2
Q

What is a hazard

A

Conditions that make perils worse or cause perils

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3
Q

Who needs general insurance

A

Individuals and companies

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4
Q

What are the four main types of general insurance products

A

Property damage insurance
Financial loss
Fixed benefits
Liability insurance

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5
Q

Explain property damage insurance

A

When individuals are at risk of property damage, loss or stolen property. They get it insured in order to indemnify the policyholder against loss

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6
Q

What is financial loss

A

Cover against things that cause financial loss

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7
Q

What is pecuniary loss

A

When a company suffer due to a debtor not paying what is owed

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8
Q

What is fidelity guarantee

A

When money is stolen or embezzled by employees

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9
Q

What is business interruption

A

Company suffers losses due to a result of having to suspend work

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10
Q

What are fixed benefits

A

Sum assured for an event that occurs if an agreed event occurs such as body parts

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11
Q

What is liability insurance

A

Provided to indemnity where the insured is legally liable to pay compensation to a third party

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12
Q

What are the types of liability insurance

A

Employers liability
Motor third party liability
Public liability
Product liability
Professional indemnity

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13
Q

Explain employers liability

A

Protects employer from employees demanding compensation for work accidents

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14
Q

Explain motor party liability

A

Protects vehicle owners from damage caused by them to other drivers, pedestrians, property

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15
Q

Explain public liability

A

Protects companies from paying compensation to members of the public as a result of something that is seen as company’s fault

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16
Q

Explain product liability

A

Protects companies from damage their products may have caused to the public

17
Q

Explain professional indemnity

A

Protects professionals such as actuaries, doctors , lawyers from claims against them as a result of advice or services rendered

18
Q

Explain policies as combinations of cover

A

When events lead to several different types of claims. So police’s can be sold as a package to meet all the needs of the policyholder

19
Q

How to access general insurance products

A

Brokers - give you an idea of multiple products
Contact directly
Aggregator websites - obtain several quotes on the website

20
Q

What are the characteristics of general insurance policies

A

Premiums are payable either as a single premium in advance or a regular premiums

Short term policy

Any amount of claims

Claim frequency and amount are uncertain

21
Q

What is long tail in GI

A

When there are policies that take a long time for the claim to be reported

22
Q

What are risk factors

A

Characteristics of the policyholder that precisely define how much risk he or she is exposed to

23
Q

What are rating factors

A

Approximation of risk factors

Which are easily measurable
Roughly proportional to risk
Difficult to misrepresent

24
Q

What is the measure of exposure

A

Value component of the policy and a way to standardise the premiums

25
Q

What needs to be determined when pricing a policy

A

What is insured
What are the perils
Probability and present value
Measure of exposure
Risk factors
Rating factors
Adjustment to the probability of the event we make for each rating factor

26
Q

What are some features of general insurance policies that affect claims

A

Excess
No claims bonus

27
Q

Explain excess

A

Where the policyholder pays an agreed amount and the insurer covers the rest of the claim.

28
Q

Advantages of excess

A

Policyholder pay lower premiums
Insurers process less claims

29
Q

Explain no claims bonus

A

Policyholders get paid a bonus if there are no claims during a period of

30
Q

Advantages of no claims

A

Policyholders don’t claim on small losses which reduces number of claims for insurers

31
Q

What are IBNR claim reserve

A

Claims which insurer expects already happened but not reported

32
Q

What are outstanding reported claims reserve

A

Claims which insurer knows about but has not paid

33
Q

What is the catastrophe reserve

A

A reserve to assist insurer in case a catastrophic event occurred

34
Q

Why is general insurance possible

A

Despite being dynamic risks , insurers take advantage of short term policies to be able to review and change policy prices year after year

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