Ch12: General business environment (2) Flashcards
1
Q
Types of regulatory restrictions
A
- a restriction on the types of contracts an insurance company can offer
- restrictions on the premium rates, or charges, that can be used for some types of contracts
- restrictions on the rating factors that may be used to calculate premiums
- requirements relating to the terms and conditions of the contracts offered
- restrictions on the channels through which life insurance may be sold or requirements as to the procedure to be followed and info to be given
- restrictions on the ability to underwrite e.g. prohibition of use of genetic rest results
- an indirect constraint on the amount of business that can be written
- may limit what a company would like to do in terms of investment
- the types of asset
- the amount of any particular asset that can be taken into account for the purpose of demonstrating solvency
- extent to which mismatching is allowed
2
Q
Approaches to taxation
A
- tax on annual profits of the business (excess of change in assets over change in liabilities, generally supervisory reserves)
- tax on investment income less some (or all) operating expenses
- might be tax on premium income
3
Q
In terms of tax, the overall attractiveness of a life insurance product compared to other products depends on
A
- the taxation treatment of the premiums paid (are they deductible from taxable income)
- the taxation of the life insurer’s funds during the life of the contract
- the taxation treatment of the eventual policy benefits