Chapter 23 - Contract Design Flashcards
1
Q
Factors of Contract Design
A
Risk Appetite
Regulatory Environment
Profitability
Market for the product
Competitive Pressures
- price
- product features
Level and form of benefits
Options and Guarantees
Discretionary Benefits
Discontinuance/termination
/cancellation Benefits
Financing Considerations
- capital requirements
- method of financing
Accounting implications
Administrative Issues
Premium / contribution pattern
Charges vs Expenses
Extent of cross subsidies
Consistency with other contracts
In reality, these will conflict each other and the designers must balance the factors out
