Chapter 5 Flashcards
How often does the process of strategic planning occur
Annually but companies will always be looking for ways to improve
What is the essential purpose of strategic planning
Set the business On a path of best performance
What do strategic managers do when strategy planning
Monitor the business environment with changes and new opportunities
With improvement in growth
Profitability
Market share
Brand presence often at the heart of the strategic ambitions
In large firms who do the strategy planners refer to
The chief executive and finance director
What projects do the strategy team undertake?
Projects for the senior executives on new areas of business
Look into expanding and developing existing business lines or operations
What type of research all the strategy team undertake
Supply and demand Lost history and trends Regulatory hurdles Staff availability and expertise Start-up costs or business acquisition costs
What are the four Areas of a strategy team is principal activities
Mergers and acquisitions
Classes of business
Geographical spread
Partnerships
Under strategy focus for mergers and acquisitions access to records of the target companies is vital particularly for the buyer these include following
Financial records
Sales Claims profile Staff numbers Service costs Regulatory status
Under the strategy teams principal activities what is classes of business
The strategy team will look at potential for a firm to enter into new classes of business or whether they should continue in a particular class
Under strategy focus teams principal activities what is the focus on a geographical spread
They will assess penetration in areas where they believe the firm has ability to sell and service policies locally
What does it mean by strategy for providing insurances on a white label basis
It balances sufficient sales with losing the immediate brand recognition that a company may want
What is outsourcing
Outsourcing is a sub contracting of a business activity with the aim of improving the overall efficiency of the company
A strategy to manage costs and Access special skills and knowledge of results in what
Outsourcing of certain functions
Who do many insurance companies now outsource a claim function to
Third-party administrators to manage all aspects of the claims
What percentage of new motor insurance policies are purchased in the UK via price comparison websites
60%
What will the strategy development Process consider in order to match the planning period with the strategic objectives
Various time horizons
What happens when the various elements of a strategy have been set
They are passed onto operational management for implementation
The business planning process will require business units to complete a planning document that will cover which following points:
Classes of business to be written Maximum value to be insured Gross premiums Planned loss ratios Investment strategy Reinsurance strategy
Who agrees the underwriting strategy
Senior management
What do you senior management focus on with the underwriting strategy
Transacting a book of business where sufficient premium is acquired across all policies that claims can be met
What is a hierarchy of the underwriting department
Top: Director of underwriting Head of department Class underwriters Section supervisors Underwriters Assistant underwriters
What is the pure risk premium
The part of a premium necessary to pay for losses and loss related expenses only.
It excludes other expenses such as sales and marketing
What information is normally provided an information pack for printing pack for underwriters for Buildings and contents
Construction and risk management features such as hazardous cleaning fluids
What information is normally provided an information pack for underwriters for
BI
Details of earnings over the last three years are projected earnings for one or two years going forward
What information is normally provided an information pack for underwriters for EL
Number of staff an estimated annual payroll
What information is normally provided an information pack for underwriters for PL
A description of a type of product produced an annual turnover
What information is normally provided an information pack for underwriters for Directors and officers
Number of directors and details of shareholders
What information is normally provided an information pack for underwriters for motor
Details of all vehicles including any security devices fitted
What information is normally provided an information pack for underwriters for claims
A schedule of all losses over last five years
We are delegated authority the Party to whom authorities been delegated is known as what
The coverholder
What is an agreement to set up between the parties which sets out the Scope and extent of the authority delegated to the Cover holder
Binding authority
What is the attraction of delegated authority from insurers point of you
The flow of business arising from a tailored policy wording
What is a managing general agent
they don’t just hold the under writing pen they also undertake other activities such as marketing, selling admin
Do you managing general agents provide funding for claims
No although it may undertake claim payments from a fund provided by the insurer
What is a line slip
An agreement between an individual broker and a group of two or more insurers whereby each insurer agreed to accept a pre-agreed proportion of a specified type of insurance
B- Who will do research on behalf of the board? (Strategy)
Strategy planner / senior managers
B - what is swot
Strength
Weakness
Opportunities
Threats
B- what do the strategy team do?
Use swot Work out weather its m&a Launch new projects Reach new territories Different distribution channels
B - what are the different types of actuary include
Pricing to predict loss rstes for a business
Reserving
Modelling specialist
Solvency capital specialist
B - in actuaries what does it not include
Claims
B- what does a modelling specialist do in actuaries
What impact storm or flood would have on a portfolio
B - What is risk management
Identification, analysis and control of all risk
B - what are the parts of a risk process
Inherent risks
Residual risks
Risk ranking
Risk register
B - What do the parts of the risk process help do?
Can identify the risk and help determine how to control the risks
B - what will the risk manager look at?
Strategic risk Insurnace pricing and reserving tisk Investment / market risk Credit risk Operational tisk Group tisk
B- in risk management what is credit risk
Both not being paid premium and not being reimbursed by the reinsurer due to the bankruptcy
B - in risk management what is meant by operationsl risk
Not enough staff / better staff / better equitment
FUNCTION MANAGER
B - what does the facility manager
Help staff morale IT equipment Desks / chairs Creating a nice office Find a premises
What is the consumers rights act 2015
Focuses on unfair contract terms unfair treatment of customers
What three elements are part of customer service
- Pre-transactional (staff training and preparation)
1. Transactional (customer service demands and delivery) - Post transactional (claims handling handling complaints cross selling)

How do general business pricing actuaries provide support to the underwriting team
By predicting loss ratio is based on historical performance of the book
How do actuaries help with reserving
They undertake extensive reviews of the initial reserve seat against a claim compare to the final actual costs in order to assess the trends
How do actuaris support the solvency capital
They look at the risks to the business such as credit, market, operational, group, strategic and reserving to calculate the worst case scenario
A- What is a logical process of a risk management identification analysis
1- identifying the firms strategic objectives
2- risk identification (brainstorming, site visit, scenario analysis, flow process analysis)
3- risk analysis (looking at the probability of a risk event happening and the impact on the objectives of the company)
4- risk reporting
5- monitoring and iteration 
a- What is a risk register
A centralised data source on all risks the company is known to face and it is a job at the risk management department to keep it current and report significant findings
In the risk analysis how will risk to be assessed
From both an inherent and residual viewpoint
How does the inherent analysis describe the risk
Without any special controls applied except perhaps the basic common sense controls. For example what is the risk of injury you would expect people to take reasonable control
What is the residual risk
Should somebody have safety training such as guidance on lifting heavy objects reduce the risk to acceptable residual risk
 What is the RAG rating when risk ranking
Any risks in a red (9 to 15) category warrant immediate attention in a process of risk reduction will be remain recommended this is known as the red amber, green rating
What are the three main types of assets
Premiums, shareholders funds retained profit and loans, claim reserves
What Does the role of the investment department include
Discussions with strategy, underwriting and close colleagues to gain an understanding of the nature of the insurances that the company plans to write
What is the finance director
A key member of a strategy development team and company leadership they make decisions regarding the insurance to be transactions, management of costs and expenses, investment strategy and capital raising
How does the finance team help with solvency II
They are responsible for setting asset and liability, market and credit risks
Who insures that the administrative operations under the companies act 2006 and stock exchange listing rules are compliant with
The company secretarial function
Who looks after all the documentation, filings and registration is required by companies house, including the registration of companies directors
The company secretary
What is outsourced internal audit
Where external consultants may be engaged to undertake the work
Who do internal auditors report to
The chairman of the audit committee who is a non-executive director of the board
The senior executive such as a finance director or chief executive
Who is responsible for ensuring that all procedures required for salary payment or replace an operating effectively
The HR team
What does the FM team do
Only takes maintenance, operation, cleaning and repair and security of the premises
