Measurement Tools

Question 1

List 2 reasons measurement tools are very useful

Answer 1

1. The results of a tool may indicate the need for further investigation (either via evaluation of other tools, or inquiry of management)
2. When multiple tools are used together over a period of several years, they can provide an early warning of high risk insurers

Question 2

6 examples of poor decision making that have lead to insolvencies

Answer 2

• little or no reinsurance
• insufficient reinsurance for the amount of risk
• very rapid premium growth
• significant adverse development
• inadequate pricing
• serious data problems