Chapter 4 Key Points Flashcards
what are corporate objectives
high level statements of intent, usually expressed in very broad and simple terms
how is the high level objective incorporated into the underwriting strategy
through business plans, these are reviewed on a regular basis to ensure the existing underwriting strategy is capable of producing the required results
what are physical and moral hazards
aspects of a risk that are likely to influence the occurrence and/or severity of a loss
what is physical hazard
those physical aspects of a risk that directly impact on its insurability or the terms, conditions and exceptions at which insurance may be affected
what is moral hazard
relates to the conduct of the proposer/insured, very difficult to correct or alleviate poor moral hazard
why do insurers group risks together
ease of analysis and rating, group similar features and characteristics together as they have similar claim profiles
underwriting criteria
derived directly from the implementation of the underwriting criteria but may also form part of the underwriting criteria
main functions of risk improvement
reduce probability of loss prior to any claim events
counter the impact of claims resulting from a common cause
levels of delegated authority
will be negotiated between the parties and will vary from signing and issuing policy docs through to quoting and binding risks
potential problem with delegated authority
legal relationships that exist where underwriting and acceptance authority has been granted, creates potential conflicts of interest, important for there to be a clear separation of duties carried out by the intermediary
what must insurers providing cover on an international basis take account of
local legislation
local taxes
requirement for documentation to be produced locally in some territories
certain cover may not be desirable to provide abroad
