General Insurance - Market, Premiums and Reinsurance Flashcards
What are the five main types of companies that provide general insurance?
- Insurance Companies
- Lloyd’s Syndicates
- Captives
- Professional and Indemnity clubs
- Other mutual associations
What is the total premium income limit in a Lloyd’s Syndicate?
This the maximum premium that is allocated to each name to provide
How does Lloyd’s manage to keep it’s track record of not having defaulted a risk?
- Sydndicates assets
- Member funds
- Lloyd’s central assets
What are the advantages of captives?
- They fill gaps in cover that exist on the insurance market
- There are tax and legislative advantages from offshore captives
- The insurer profits are kept in house
- Larger risks can be borne by the group than the individual subsidiaries
- Open market captives can provide cover to the parent company’s customers
What are the major uncertainties that insurers face?
- Claims frequency
- Cost of claims
What are the three ways that the risk can be made sure to be truly reflected?
- Exposure Measure - Basic measure of risk
- Risk factors - Underlying factors that influence risk
- Rating factors- Used if the risk factors aren’t easily measurable and are proxies
What does the premium charged have to be sufficient to cover?
- Risk premium
- Contingency loading
- Expenses
- Commission
- Profit margin
What is the difference between reinsurance and co insurance?
- Reinsurance is where the initial risk is only with one insurer and there are separate contracts
- Coinsurance is where the insured simultaneously has contracts with more than one insurer
What are the proportional types of reinsurance?
Original terms
Quota Share
Surplus Reinsurance
What is the EML
The largest loss that could arise from a single event within the realms of possibility
What are the non proportional types of reinsurance?
Risk excess of Loss
Aggregate risk excess of loss
Catastrophe risk excess of loss
Stop loss
How are the claims aggregated in aggregated RXL?
- By cause
- By event
- By class
