Chapter 0 - Intro to GI

Question 1

General Insurance

Answer 1

Any type of insurance that is not life insurance

Question 2

Free reserves

Answer 2

Excess assets over insurance liabilities

Question 3

Technical reserves

Answer 3

Amounts set aside in respect of expected payment to or on behalf of policyholders

Question 4

Reporting delay

Answer 4

Time from the event occurrence through to the time that the insurance company is notified of the event

Question 5

Event delay

Answer 5

Period between when the insured event happens and when the policyholder realises the event has happened

Question 6

Settlement delay

Answer 6

Period between notification to the company and the payment of the claim

Question 7

Short tail business

Answer 7

Claims that are generally reported and settled quickly by the insurer

Question 8

Long tail business

Answer 8

Business which has a sizeable proportion of total claim payments that may take a long time for the insurer to settle

Question 9

Outstanding reported claims (OCR) reserve

Answer 9

The estimated reserve needed to settle the claims that the company knows about at the accounting date

Question 10

Incurred but not reported (INBR) claims reserve

Answer 10

The reserve needed to cover the claim payments for incidents which have happened but have not been reported to the insurance company

Question 11

Reserve for re-opened claims

Answer 11

The reserve that explicitly allows for claims that the insurer treats as being fully settled but which might one day require further payments

Question 12

Reserve for claims’ handling expenses

Answer 12

Reserve set aside for settling claims with respect to OCR, IBNR and re-opened claims reserves

Question 13

Unearned Premium Reserve (UPR)

Answer 13

Portion of premiums held in respect of unexpired exposure

Question 14

Acquisition costs

Answer 14

Expenses that are incurred by the insurer at the start of the policy

Question 15

Unexpired risk reserve (URR)

Answer 15

Reserve held to cover all the claims and expenses that are expected to be incurred in the future by the unexpired portion of existing policies

Question 16

Additional unexpired risk reserve (AURR) formula

Answer 16

AURR = min(URR - UPR,0)

Question 17

Claims equalisation reserve

Answer 17

Reserve used to smooth the profits from one year to another

Question 18

Catastrophe reserve

Answer 18

Additional reserve to cover the losses that might arise from a catastrophe

Question 19

Solvency margin

Answer 19

Excess of assets over liabilities

Question 20

Solvency margin ratio

Answer 20

Solvency margin/net written premiums

Question 21

Minimum Capital Requirement (MCR)

Answer 21

The level, according to law, at which an insurance company’s free reserves must exceed

Question 22

Underwriting result (AKA underwriting profit)

Answer 22

The term given to the excess of premiums over claims and expenses: Earned premiums - claims incurred - expenses incurred = underwriting result

Question 23

Reinsurance

Answer 23

Insurance of insurance companies