Chapter 15 Insurance Company Flashcards
policies provide protection against untimely death or illness, and/or transfer wealth through time to retirement
Life Insurance
protects against personal injury and liability associated with specific events
Property and Casualty Insurance
assess and price risk
Insurance Underwriters
sell insurance contracts
Insurance Brokers
is the problem that customers who apply for insurance policies are more likely to be those in need of coverage
adverse selection problem
occurs when, after an insurer and a customer enter into an insurance contract, the insured engages in risky behavior because the risk is covered
Moral Hazard
premiums are invested in market securities
value of policy depends on the value of the securities
Variable Life Insurance Policy
are investment vehicles that liquidate a fund (pay investors) over a long period of time
Annuities
Insurance companies can attempt to share risks by buying insurance from other insurance companies
Reinsurance
a measure of overall profitability
equals the loss ratio plus LAE to premiums written plus commissions and other expenses to premiums written
Combined Ratio
a measure of overall profitability
equals the combined ratio minus the investment yield
Operating Ratio