F_Extras 4 Flashcards
Elements of the product cycle
Product design Pricing Marketing and sales Underwriting Claims management Experience monitoring Valuation
Insurers risks re endowment assurances
Investment returns
Expenses
Withdrawals (especially when asset share is negative)
mortality (including anti selection risks
Capital requirements of the insurer depend on
Contract design
Premium payment frequency (SP vs RP)
The relationship between pricing and supervisory Reserving bases
The additional solvency capital requirements
Level of initial expenses
Needs met by WLA
meeting payments that may arise on death:
- funeral expenses
- inheritance tax
- transferring wealth between generations
IP Split deferred
Reduced payment in the first few weeks
Increased payment thereafter
IP Linked claims period
Waive the deferred period if sickness re occurs within a specified time. (Relapse)
IP deferred period
No payment during first few weeks of illness
Describe the contribution method
Better interest
plus better mortality
plus better expenses and interest
Give the formula for contribution dividend
(V0+P)(i’-i)
+ (q-q’)(S-V1)
+ E(1+i) - E’(1+i’)
How is the contribution dividend paid, does it have a TB?
Dividend converted to paid up addition to benefit, not paid out in cash.
Yes.
Give the formula to reconcile data
Data(t-1)+NB-Run off Biz=Data(t)
What type of benefits can you have
Guaranteed (monetary/price index or similar)
Discretionary
Investment linked
What’s the formula for liability outgo?
Benefit payments + Expense outgo - Premium income
In decided what goes into the NAV, what things are the same for both expropriation and appropriation?
What is different, how?
Same:
Current (Assets-Liabs)
+Accrued income
-Allowance for accrued tax
Different:
Market price of assets on offer basis+expenses incurred purchasing them (buying assets at high price)
MP of assets on bid basis-expenses incurred selling them (selling assets at low price)
Explain the bid offer spread? Which one is buying and selling, highest and lowest?
Offer = high price = price to buy Bid = low price = price to sell asset
