full revision Flashcards
what risks do all 4 products have in common? (3)
1) anti sel
2) withdrawals - selective withdrawals
3) financial risk of wd when as<0
what is the speicifc ip risk?
claim inception & termination rate incorrect
transfer probs in h-s model
what is the spcific ci risk?
diagnosis rates to illnesses on contract
what are the pmi risks? (4)
1) benefits determinded by unctrollables e.g. GP
2) claim freq higher than expected e.g gp referralls
3) state system v.good so no demand, high expense
4) 1 large, many small claims
what are the ltc risk? (4)
1) marketing/reputation if not meeting pre
2) expense and inflation risk
3) investment risk
4) h-s-d transfer probs wrong (ie. claim inception/termination)
how does u/w manage risk? (5)
1) protect from anti-sel
2) protect from lives where risk impossible to asses accurately
3) ensure accurate risk classification so fair ratings
4) make experience = expected in pricing
5) substandard lives:
identify them, and the most suitable approach to dealing with them, suitable premiums too.
types of medical info (4)
1) proposal form filled in by applicant
2) applicants doctor’s medical notes
3) medical exam at insurer request
4) specialist medical tests at insurer request
what is a moratorium clause? (5)
1) p/h gets immediate cover
2) no formal u/w at acceptance
3) blanket exclusiosn for conditions recieved treatment in past 5 years
4) waver to 3) after 2-3 years if no more treatment
5) past medical history examined at point of claim
options for substandard risks? (7)
1) load premiums
2) defer cover e.g. def period
3) decline
4) accept as loss leader
5) offer different cover
6) exclusion clauses
7) offer to reinsurer, zero retention, facultative
explain how group medical u/w is done vs individual (13)
1) large schemes may not use medical history
2) larger the scheme, lesser the anti selection
3) though flexi-scheme much same anti-sel as individual
4) in larger schemes premiums charge on scheme experience not individual u/w
5) normally free from u/w up to a limit
6) dependants underwritten differently than individual
7) level of u/w depends on assumed take-up rates
8) # lives/age/sex may be unavilable immediately
9) a deposit premium paid until 6) gathered
10) moratorium possible for new entrants
11) distribution methods of group vs. idnividual may be different hence different u/w
12) must consider influence of intermediary who sells the product
13) must consider the level of knowledge the company will have on applicants, much more than insurer
how do you do financial underwriting, give 2 examples? (3)
need to provide financial details
e.g. evidence of earnings/assets
other products held?
how might group ip be underwritten for new joiner? (4)
if group large enough, free cover
short proposal form required
benefits above free cover to be underwritten
normally need to declare “actually at work”
what losses happy on policy lapse? (9)
financial loss when as<0 early on
premium may not cover commission
poor clawback
termination costs
expected profits not recieved
wasted effort aquiring business
losses on future sales if lapse due to poor customer experience
selective lapses mean poor claims experience
if caused by misselling may have regulator penalty
how do you limit lapse risk? (12)
design meets customer needs good education e.g. sales literature good sales training clawback customer retention team survery customers to why lapse good customer service communication with customers is regular monitor competition designed to encourage persistency e.g. ncd monitor lapse rates of sellers and take action target types of customer less likely to lapse
u/w consideration on ip (8)
proposal form e.g. sex/age/location
benefit features (rr/size/deferred period/term/options/claim definition)
medical evidence (proposal/extra questionnaires/gp report/medical exam/specialist tests)
lifestyle e.g. skiing
financial details vs size of benefit
regulations e.g. gender use
social constraints e.g. genetics
terms to offer e.g. special term/premium load/exclusions/decline
