Financial Underwriting Flashcards
What role does the policy owner play in reinsurance?
None
What is reinsured under the risk premium method?
The death strain
In what act was insurable interest developed?
Life Assurance Act 1774
Why must solvency of office be considered in financial underwriting?
The requirement of the PRA
(Prudential Regulation Authority)
All life offices have to maintain a solvency margin, which is broadly the excess of assets over liabilities.
What is qx on a mortality table?
The probability that the person aged X will die before the person aged X +1 - the mortality rate for that age.
Why has actual mortality experience been better than predicted by mortality tables?
Mortality table is complied from past stats and mortality has been improving.
Specify 3 things an expense loading would have to cover
Employees salaries, commission, costs of buildings used, regulatory costs and medical fees.
What is the real cost of a death claim to the life office?
The sum insured less the reserve, known as the death strain
What is a retention?
The maximum sum insured a life office will hold before seeking reinsurance.
What is the name given to the automatic reinsurance of a block of business?
Treaty Reinsurance
What is quota share reinsurance?
The reinsurance of a fixed percentage of every policy in a particular business class.
When does insurable interest have to exist?
At outset.
An underwriter charges an extra amount per £1,000 sum insured for a steeplejack. This is know as
The Monetary Extra
