Chapter 5 - Functions Flashcards
What is the role of underwriting?
Calculate premiums
control of the extent of cover given
What is peer review in underwriting?
when an underwriter’s quotations are discussed and reviewed by a colleague and possibly by a superior if the underwriter’s authority requires it.
What is a delegated authority?
some form of underwriting or policy administration to be carried out by outside entities. The aim is to acquire business and reduce management expenses.
What is defined as a coverholder?
The party to whom authority has been delegated
What is binding authority?
sets out the scope and extent of the authority delegated to the coverholder
What is a managing general agent?
a type of delegated authority arrangement whereby the MGA organisation not only ‘holds the underwriting pen’ of the insurer, it also undertakes all the other activities of an insurer such as marketing, selling, and administration.
Does an MGA fund claims?
No - it may undertake claims payments from a fund provided by the
insurer.
What is the role of the claims department?
to ensure that when claims are made the policyholder
receives a fair and equitable settlement for their loss, in accordance with the contractual obligations of the insurance policy.
What is the role of the compliance department?
to ensure, as far as possible, that the operations
of the firm are compliant with regulatory requirements.
What are the 4 types of actuary?
pricing
reserving
modeling
those who focus on solvency capital
Whats the role of a pricing actuary?
- To provide support on pricing and risk structure, predicting loss ratios based on historical performance of the book
What is the role of a reserving actuary?
- To calculate technical reserves for claims and review reserve data, compare losses against reserves and look for trends
What’s the role of a modeling actuary?
- To predict likelihood of future losses and severity of losses against the portfolio of business.
What is the role of an actuary who deals with solvency capital?
- Looks at the business as a whole and the risks its exposed to, to make sure the business doesn’t become insolvent and estimate worse case scenario of all risks.
What are the three main types of assets?
Premiums
claims reserves
shareholder funds /retained profit and loans
What does an investment return consist of?
interest
dividends payments
capital growth
What is the role of the investment department?
- Look at the business as a whole and the nature of business the company plans to write to make sure the company can get a better investment return rather than a loss.
What is the role of the finance director?
Make decisions regarding the insurances to be transacted, management of costs and expenses, investment strategy and capital raising and solvency ratios are all under the direct influence of the finance director.
What does the strategy team focus on?
M&A’S
Financial records
sales
claims profile
staff numbers
service contracts
costs
regulatory status
What does penetration mean in the insurance market?
The purchase of insurance relative to the number of potential buyers may have reached near saturation in the countries where operations presently exist.
What is meant by the term ‘white label insurer’?
A ‘white label insurer’ is one that provides insurance policies through a partner
company, under whose name the policies are branded. The insurer may also offer
products under their own brand through different distribution channels
What is outsourcing?
subcontracting of a business activity with the aim of improving the overall efficiency and/or effectiveness of the company.
What does a TPA do?
The TPA manages all aspects of claims, including
appointment of adjusters, engineers, surveyors etc., manages the claims file and records, establishes reserves, settles claims and pursues recovery and subrogation rights.
What is meant by time horizons?
Times stamps for a planning period - for example, The starting position will be a one-year plan for the
financial year ahead, supplemented with three-, five- or ten-year plans.
What is the secretarial team responsible for?
The secretarial team is responsible for managing the share register, although this is likely to be outsourced to an external registrar.
Role of the internal audit team?
the key focus is on the financial statements in the firm’s annual report and accounts.
What do themed audits cover?
- IT security management.
- Underwriting controls.
- Banking reconciliation.
- Health and safety training.
- Customer complaints management.
What are the possible advantages of a merger or acquisition?
The possible advantages include cost efficiency through a greater scale or access to new areas of business
Explain the meaning of flow process analysis in the context of risk management
Risk managers review the reliance on the various stages of insurance processing such as sales/advice, administration (particularly with outsourced services), claims
investigation and settlement and financial management. The purpose is to identify potential bottlenecks or dependencies on every aspect of business processing
Explain the meaning of time horizons in the context of strategic planning
The strategy development process will consider various time horizons in order to match the planning period with strategic objectives. The starting position will be a
one-year plan for the financial year ahead, supplemented with three-, five- or ten-year plans
