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M92 > Chapter 5 > Flashcards

Chapter 5 Flashcards

1
Q

Underwriting

A
  • calculates premiums and controls policy coverage
  • generates income while managing claims-related losses for long term prosperity
  • focused on a balanced book of business
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2
Q

Underwriting Department Structure

A
  1. Director of Underwriting
  2. Heads of Department
  3. Class Underwriters
  4. Section Supervisors
  5. Underwriters
  6. Assistants/Trainees
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3
Q

Underwriting Calculations

A
  • details factors affecting premium (age etc)
  • specified risk factors for additional charges (“loadings”)
  • includes loss history considerations
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4
Q

Premium Calculation

A

Pure Risk Premium : Covers only losses and related expenses

Add-Ons : Expenses, profits and brokerage fees

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5
Q

Life Insurance Underwriting

A
  • manuals contain premiums per £1000 assured
  • adjustments made for smoking, health conditions or hazardous occupations
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6
Q

Underwriting Quotation Process

A

Internet : automated
Phone : call centres etc
Commercial Business : brokers

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7
Q

Information Required for Commercial Quotes

A

Buildings/Contents : survey and process descriptions

BI : past and project earnings

Liabilities : staff numbers, payroll, products and shareholders

Motor : vehicle details and security measures

Claims : 5 year loss history

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8
Q

Risk Management Team Structure

A
  • head of risk management
  • senior risk managers
  • risk analysts
  • specialists
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9
Q

Risk Identification Techniques

A

Brainstorming
Workshops
Site Visits
Scenario Analysis
Flow Process Analysis

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10
Q

Risk Management Strategy

A

Analysis
Reporting
Monitoring
Register

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11
Q

Inherent VS Residual Risks

A

Inherent - Risks without specialised controls

Residual - Remaining risks after applying controls

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12
Q

Risk Ranging (RAG)

A

Red (9-15) - immediate attention

Amber (5-8) - moderate

Green (1-4) - acceptable

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13
Q

Claims Philosophy

A
  • defines goals, targets and service standards
  • analysis of the claims process stage
  • establishes KPIs
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14
Q

Disputed Claims

A
  • negotiation
  • mediation or ADR
  • arbitration or litigation
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15
Q

Claims Recovery

A
  • subrogation
  • contribution
  • reinsurance protections
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16
Q

Delegated Authority

A

Allows underwriting or policy administration by outside entities
Reduces management expenses and acquires business

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17
Q

Coverholder & Binding Authority

A

Coverholder : the party delegated with authority

Binding authority : agreement defining scope and extent of delegated authority

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18
Q

Specialised Schemes in Delegated Authority

A

Tailored policy wording for specific clients
Popular in Lloyds and London markets

19
Q

Compliance Department Key Tasks

A
  • communicating regulatory updates
  • acting as a regulator contact
  • checking customer protection procedures
  • performing anti-money laundering and anti-fraud measures
20
Q

Compliance Training and Legislation

A
  • organises training on key issues like UK sanctions, anti-corruption and data protection
  • covers senior management & certification regime (SM+CR)
21
Q

Compliance Monitoring and Reporting

A
  • audits practices for regulatory compliance
  • reports performance and breaches to the board
  • maintains compliance manuals detailing operational requirements
22
Q

Actuarial Department Team

A

Headed by Chief Actuary
Includes qualified actuaries, students, analysts and part-qualified staff

23
Q

Actuary Types

A

Pricing Actuaries : assess risks and set premiums
Reserving Actuaries : predict trends in reserve movements
Modelling Specialists : perform CAT modelling
Solvency Capital Experts : calculate solvency requirements

24
Q

Catastrophe Modelling (CAT)

A

Simulates events like hurricanes, floods and earthquakes
Estimates losses and aids in premium setting

25
Solvency II
Requires internal models to assess capital needs Calculation kernel central to solvency assessments
26
Customer Service Activities
Pre-transactional - training staff, complaint handling, warranties Transactional - managing demand patterns and service delivery Post-transactional - claims handling, complaint resolutions and cross-selling
27
Types of Assets
Shareholder Funds - retained profit and loans Premiums - income from policies Claims Reserve - funds to settle claims
28
Investment Strategy
Short-Tail : cash or short-term bonds Long-Tail : long-term investments like equities or property
29
Returns on Investment
Composed of interest, dividends and capital growth Supports the income of life and pension policies
30
Finance Management
Central to operations, profitability and returns to shareholder
31
Finance Leadership
Finance director (FD) or chief financial officer (CFO) Supported by financial controllers, accountants, analysts and accounts staff
32
Accounting Responsibilities
Manages banking, reconciliation and income accounting Main Income : premiums, investment income, fees, commissions, reinsurance recoveries
33
Credit Control
Ensures timely payment of premiums Protects against credit risks via separate premium accounts
34
Capital Raising
Treasury team raises additional capital and maintains investor relations Critical for funding business growth and solvency needs
35
Strategic Planning
Long-term resource deployment to meet objectives Involves senior managers and specialists
36
Strategy Team
Undertakes projects on business expansion, new lines and operations Uses internal and external resources
37
Strategy Research Areas
Supply & Demand : competitive environment, regulatory challenges and staff expertise Investment : start-up or acquisition costs
38
Mergers & Acquisitions (M&A)
- advantages include cost efficiency, new markets and scale - conduct detailed target analysis
39
Strategy Partnerships
- collaborate with brokers or organisations to develop niche products White label strategy: Sell products under another brand
40
Business Planning Process
- focuses on aligning operational management with strategy - uses structured documents covering classes of business, premiums, loss ratios, expenses and reinsurance
41
Company Secretary Role
- ensures compliance with Companies Act 2006 and stock exchange listing rules - handles filing with Companies House and manages share registers
42
Internal Audit
- ensures compliance with the control environment - annual audit plan approved by the audit committee
43
Types of Audits
Themed Reviews : focus on topics like IT security, underwriting or complaints management Accounting Audits : protects financial resources from fraud and errors
44
Other Positions
- IT Department - Facilities Management - Human Resources - Recruitment - Learning & Development

M92 (10 decks)

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