Chapter 4 Questions Flashcards
what are corporate objectives
high level statements of intent
usually expressed in very broad simple terms
how are corporate objectives implemented within an organisation
underwriting strategy is developed (capable of producing the required corporate results), translated into business plans used by senior management to review results and decisions concerning the operation of the strategic policy
what are the various ways in which an insurer might choose to expand into another territory
appoint local agents/representatives
enter a joint venture with another insurer
acquire a local insurer
use a foreign subsidiary within its own group or by opening a local branch
name three organisations set up by the insurance industry to combat fraud
IFIG
IFB
IFED
what is IFIG
insurance fraud investigators’ group
what is IFB
Insurance fraud bureau
what is IFED
insurance fraud enforcement department (operated by city of london police)
what is moral hazard
arises from attitude and conduct of the proposer or insured, such as dishonesty or lack of cooperation with the insurer
why do insurers try to avoid underwriting risks that exhibit the characteristics of poor moral hazard
rarely possible to mitigate or control the risks associated with poor moral hazard
why to insurers categorise private cars into rating groups
ease of analysis and rating as it would be unworkable to assess each model of car individually
what are the two main purposes of risk surveys
accurately describe, classify and assess the risk which enables the underwriter to make a sound decision on acceptability and terms
propose ways in which the risk can be improved
a uk based insurer expanding overseas is most likely to benefit as a result of
taking advantage of different economic opportunities
An overseas insurer decides to buy a UK insurer to enter the UK insurance market with a relatively small book of business. It offers insurance products that are priced very competitively. What impact is this strategy most likely to have
generate sales at a loss that could destablilise the existing market
which part of the insurance contract details the type of event insured against
the operative clause
High-level business objectives need to be incorporated into the underwriting strategy through business plans. This is likely to be broken down into the following key elements, EXCLUDING
anticipated levels of profit
