Chapter 10 - Book Management

Question 1

What is a PIF account

Answer 1

Policy in force

Question 2

What is a top ten list

Answer 2

list the following:
premium producers
producers that product the best loss ratios
10 best accounts within a LOB

Question 3

What is Premium Stratification

Answer 3

Identifying accounts based on distribution of premium levels.
example: those producing $2500 is 10 accounts or those producing $10K is 2 accounts

Question 4

What are non-financial Variables that affect book management

Answer 4

Quality of underwriting
Customer survey or satisfaction level
HIT ratio

Question 5

Describe purpose of book management

Answer 5

To monitor results and quickly react to potential problems and opportunities, whether is analazing distribution network or by territory

Question 6

Explain why setting priorities is important to book management

Answer 6

Allocate time on those items that impact the business most directly. Managers must not make assumptions, must fully analyze reports. . The good, bad, and ugley

Question 7

Why is communication important for book management

Answer 7

Working with other departments to get as much honest information as possible to ensure progress. Communicating with staff will help identity moral issues and training gaps. Both internal and external contacts needed to have contiounous communication. (consultants, resinurers etc)

Question 8

Describe Various reports and analytical tools that can be use in book management

Answer 8

Reports on:
Premium by region
Lines of business performance
New Submission received vs New submission bound (HIT ratio)
Renewal retention rate
Cancellation # and rate

Question 9

Describe Various reports and analytical tools that can be use in book management

Answer 9

Profit and Loss analysis
Top ten lists
Premium Stratification
Producer Management (premium, loss activity, profitability, growth)

Question 10

discuss various corrective actions that insurers can take, including changes in underwriting, loss control, reinsurance, premium budgets, and renewal activities, among others.

Answer 10

Changes to:
Underwriting Pricing
Underwriting Guidelines
Claims payments
Renagotiate terms with Reinsurer (from proportional share to excess of loss
New loss control measures example: inspections done before binding
Review renewals on a more consistent basis (can drop business by taking off a % every year or use a ranking system)
Correction action: example increasing rates by 10% my not fully materialize for the whole book for up to 24 months later