chapter 5 Flashcards
How is the underwriting department typically structured?
A: It has levels like Director, Head of Department, Class Underwriters, Supervisors, Underwriters, and Assistants.
What does each level in underwriting control?
A: Each underwriter has authority to make decisions, with the Director having the most discretion.
What is an underwriting manual used for?
A: It outlines how premiums are calculated based on factors like building type, occupation, and risk factors.
What is “pure risk premium”?
A: The part of the premium that covers losses and related expenses, excluding other costs like marketing.
What is a delegated authority in insurance?
A: It’s when the insurer allows outside entities to carry out underwriting or policy tasks under agreed terms.
What is the main role of actuaries?
A: Actuaries assess risks and set premiums for life and general insurance, predict losses, and manage solvency capital.
How do actuaries estimate the required solvency capital?
A: They use models to estimate business risks and worst-case scenarios, following the Solvency II Directive.
What is CAT modelling?
A: CAT modelling simulates catastrophic events (like floods or earthquakes) to predict potential losses for an insurer.
Why is market research important for insurance companies?
A: It helps identify customer needs, monitor product success, and formulate marketing strategies.
How does solvency impact insurance companies?
A: Solvency requirements ensure that insurers maintain enough capital to cover risks and claims, with Solvency II being a key regulatory framework.
What is customer relationship marketing in insurance?
A: It focuses on using customer data to build strong relationships and retain customers for longer periods.
What is the purpose of a strategy team?
A: A strategy team develops strategic plans for business growth, assessing areas like supply, demand, competition, costs, and investment.
Who develops the business strategy in small firms?
A: Senior managers and directors typically create the strategy.
What information is crucial during M&A negotiations?
A: Financial records, sales, staff numbers, service contracts, and regulatory status.
What tool can be used for strategic planning?
A: The SWOT model (Strengths, Weaknesses, Opportunities, Threats) helps structure strategic planning.
What does “white label insurance” mean?
A: Insurance products sold under another company’s brand, not the insurer’s own.
What is the role of the company secretary?
A: They manage company filings, board meetings, and legal compliance.
Who does the head of internal audit report to?
A: The audit committee chairman (non-executive director) and a senior executive (finance director or CEO).
What does the Facilities Management (FM) team do?
A: The FM team manages office space, property procurement, building maintenance, and safety. They also handle business recovery planning in case of emergencies.
