Chapter 9 - Establishing the Price : Rating Factors Flashcards
Board Level Reporting
Issues concerned at this level:
* Growth
* Loss ratio
* Underwriting margin/profit
* Business mix
* Exposure accumulations
* Competitive positioning
* Return on capital
* Solvency
Report to Underwriting Managers
Issues concerned at this level:
* Growth by product
* Retention rates
* New business flow analysis
* Lapse flow analysis
* Loss ratios
* Claims trends
* Underlying claims
* Large losses
* Weather related losses
* Reserve consistency
* Rate changes
* Commission rate
* Expense ratios
* Exposure accumulations
* Market shares and competitor activity
Operational data
Issues concerned at this level:
* Loss ration claims statistics
* New business
* Retention
* Rate increase
* Credit control
* Compliance with contract certainty standards
Analysing Claims Data
Underwriters will consider:
* Is the experience improving or deteriorating each year?
* Is the number of claims each year increasing or decreasing?
* Is the average cost of claims each year increasing or decreasing?
* What are the causes of claims?
* Are there any large claims that are distorting the pattern?
* Are individual claims reserves accurate?
* What is the position regarding underlying claims?
* How are the claims recorded?
Claims Loss Ratio
Claims loss ratio = 100 x Claims occurred/premium
Earned Loss Ratio
Takes into account the premium that has been earned
Outstanding Loss Ratio
Figures represent claims that have not yet been settled and compared to the booked premium.
Account Performance and Monitoring - Policy Year
Suitable for addressing the performance of individual policies.
Account Performance and Monitoring - Underwriting Year
Used at account level with individual data being grouped into underwriting years based on the year in which the policy incepts.
Account Performance and Monitoring - Calendar Year
Claims and premiums from individual policies are grouped up and allocated to a calendar year.
Account Performance and Monitoring - Accounting Year
Similar to calendar year but the dates will depend on the accounting year. Prospective premium and claims developments from the accounting year end have to be estimated.
