Ch 9: General Biz Environment

Question 1

Why the state will struggle to continue to provide welfare benefits at the same level.

Answer 1

• Commitments to low taxation
• Aging populations
• Proportionately reducing taxable workforce
• High treatment cost inflation due to medical advancements

Question 2

Regulatory restrictions

Answer 2

• Restriction on the types of contract that an insurance company can offer
• Restrictions on premium rates or charges
• On the rating factors that can be used in pricing
• Relating to terms and conditions of policy (e.g. calculation of surrender values, paid-up…)
• Distribution channels and procedures to be followed and information to be given in selling process.
• On ability to underwrite
• Indirect constraint on the amount of business that may be written
• On investments (like types of assets that can be held, amounts in each asset, permissible assets in showing solvency…)