Chapter 2 - External Environment Flashcards
Legislation and regulation
Compulsory insurance in certain circumstances
Influence types of products available
Regulate sales process
State benefits
Raise employers awareness top up state benefits
Raise individuals awareness top up state benefits
Reduce levels of savings, means tested
Compulsory contributions
Moral hazard
Tax
Affects form of benefits
Innovations to avoid paying tax
Direct savings most tax effective forms
Accounting standard
Improve employers provision of employee benefits
Influence range of products marketed
Risk management requirements, capital adequacy and solvency
Part of banking and insurance regulation
Minimum standards of risk governance
Moving towards risk based frameworks
Corporate governance
Encourages managers to act in best interest of stakeholders
Incentives managers
Utilize non executive directors
Influence way in which stakeholders needs are met
Private companies
Same difficulties as mutuals in raising capital
Close involvement of woners
Access to significant additional capit
Private companies
Proprietary companies how to distribute surplus between shareholders, with profit policyholders
Competitive advantage and commercial considerations
Underwriting cycle
Profitable business
New entrants
Soft premium and reduced profits
Insurers leaving the market
Changing cultural and social trends
Level of home ownership
Impact on financial products
Demographic changes
Major impact on main benefit providers
Increasing longevity and falling birth rates
Ageing population
Affected by climate change
Climate change and other environmental issues
Way in which government, advocacy and participants act, hence behavior of financial markets
Offering products promote environmental and ethical issues
How providers communicate with customers
Control emissions by issuing permits
Physical, transition and liability risk to insurance sector
Lifestyle considerations
Younger people loans rather than savings
People with children life insurance
Older people annuities and long term care
International practice
Overseas products replicated domestically
Technological changes
Way in which financial products provided
Impact on wider admin processes
