External Environment Flashcards
External environment list
CREATE GREAT LISTS
competition and underwriting cycle
Regulation and legislation
Environmental issues
Adequacy and capital Solvency
Tax
Economic
Governance
Risk mamagement
Experience overseas
Accounting standards
Technology
Lifestyle
Institutional
Social
Trends
State Benefits
Why insurer will stay in loss making market
- Using product as a loss leader
- Diverse books on different phases subsidizing each other
- Profits to be made outweigh current losses
- Too expensive to exit and re-enter market
Aims of regulatory requirments
CRIP
*confidence in insurance sector
*reduce risk of insurer being insolvent
*intervention triggers
*protect policyholder- reduce their losses
Aim of regulator
GRIP
Capital Adequacy (definition)
Excess of assets over sum of liabilities plus capital requirement
Corporate governance (definition +aim)
High level frame,eowtd within which company’s managerial decisions are made
- Efficient management
*best interest of stakeholders
*remuneration
*non-executive directors - Meet shareholders requirements
Good corporate governance strategy
*remuneration incentivises mngmnt to act in interest of stakeholders
*use non-executive directors
>impartial view
>rep shareholders
>audit committee
>setting remuneration for executive director pay
Institutional (mutual)
*altruistic gesture
*loan arrangement
*benefit arrangement
*financing
*Product pricing
>surplus distribution
>pricing at cost
Institutional (proprietary)
- Financing
- Greater economies of scale
- Dynamic management
+ competitive edge - Dividends
*monied owners
*clos3 involvement of owner
Technology
*online platforms
*mobile apps
*social media presence
*comparison websites
*communication
*data collection
*improved health care and medical technology
* microinsurance offereing
Tax
*treatments of benefits influences Structure
*timing is important
*accumulation vs decumulation phase taxation
*inheritance tax
*influences products offered
