Chapter 2 - other influences Flashcards
Name 10 different insurance industry influences
Competition development Prior loss reserves mergers and acquisitions market dislocation reinsurance claims frequency unexpected events profitability and investments financial strength and rating agency product innovation the alternative market the employment environment electronic communication /technology
What is the main responsibility of PIPEDA
PIPEDA was designed to protect the privacy of personal information that is collected, used, or disclosed by banks, insurers and other private sector organizations.
in addition for insurance: governing how business is to be conducted with the federal government by electronic means, and clarifying how electronic records may be used as evidence
What is basic principle of PIPEDA
personal information should not be collected, used, or disclosed without prior knowledge and consent the individual it concerns.
What are the 3 main obligations of PIPEDA
Accountability (organization must designate a person to oversea compliance with PIPEDA, and organization must adopt practices. policies, and procedures to do so… also train staff to do so)
Accuracy (Decisions based on accurate information ex such as insureds age, address, marital status etc) as these items can affect premium)
Consent (the organization must have knowledable consent)
What IBNR
claims that have happed, but not yet reported to the insurance company
what is ART
alternative risk market
What is a captive
– is an example of an ART. Is an insurer owned and controlled by its insureds. Captive is usually a special purpose subsidiary created to insure the risks of its parent company
What is SIR
Is the amount of potential loss not covered by the insurance company.
What is Reciprocal
is a means of risk financing in which a group or a number of subscribing organizations together appoint a central underwriter. Colleges/Universities are good examples
What are DJ actions
declatory judgement actions. The actions required to determine if coverage exists for environmental issues.
What is limitation period
period in which the insured is allowed to sue the insurer for settlement that did not meet expectations
Tolling agreement
the agreement to suspend the limitation period
What is class action
is a lawsuit brought against another party by a group of people with similar claims against that same party
What is coordinating council
is a lawyer chosen by the insured (defendant) of the class action lawsuit. The lawyer or lawyers who will conduct the insured’d defence in negotiations and legal proceedings with the plaintiffds and the judge
Competition
200 insurers in Canada, 2/3 of competition of foreign owned
Advantage of foreign owned companies is easier to raise capital
Problem with foreign ownership is many companies may become intolerant to any deteriation of the Canadian insurance climate. Europe not comfortable with liability losses
Mergers and acquisitions
can force more competition for other brokers and insurers
Market dislocation
when a competitor leaves the market for whatever reason ex: Geographic area. The question for other insurers becomes, how can we take advantage of this?
Development of prior accident year reserves
IBNR - may be worse than expected
Unexpected events
good financial results can be tarnished by random catastrophic results
profitability and invesments
insurance companies do not just make money with profits gains, they do so by investing in the markts
Financial strength and rating agencies
personal and commercial insurance buyers want to insure with a financially strong insurer that will be ready to pay a claim if the time comes. Standard and Poor. AM best company
What influences of technology and industry group on insurers and the industry
Public Safety Canada
Emergency Management – develops policy, response system and standards for such as thing as natural disasters, terrorism, computer viruses
Canadian Standards Association – standard and code which indicates acceptable levels of safety, quality and performance
Council of Canadian Fire marshals and fire commissioners
Canadian safety council – a chartitable organization dedicated to safety. Example would include: the motorcycle training program
Canadian boiler and machinery underwriters association
Insurance institute for highway safety
what are the legislative and judicial facors that influence insurers and the industry
PIPEDA Environmental legislation (DJ actions) Limitations act aka limitation period. Class actions Judicial decisions Faciliaty association Property and Casualty Insurance Compensation Corp (PACICC)– and industry run, not for profit entity that guarantees most property and casuality insurance policies. Designed to come into operation if an insurer become insolvent and not able to pay the losses to the insureds.
