Module 9: Underwriting Flashcards
What is underwriting?
Process by which an insurer assesses the acceptability and/or price of the insurance (i.e. the transfer value of the risk)
The London Market is known as a subscription market. What does this mean?
Two or more insurers, which may be insurance companies, Lloyd’s syndicates or both, underwriter risks together in varying proportions.
On a “mixed market” slip, where there are both Lloyd’s and company market participants, what is the convention in the London Market?
There are separate leaders for Lloyd’s syndicates on the one hand and for the company market on the other.
What is open year?
A year of account for a Lloyd’s syndicate that cannot be closed…
- because there is uncertainty usually over outstanding claims liabilities.
What is Probable Maximum Loss (PML)?
An estimate of the likely maximum amount of a claim or series of claims, which may result from the occurrence of a single event.
What is Reinsurance to Close?
At the end of a 36 month period, each individual year of account of a Lloyd’s syndicate is analysed and in order to finally close the year and declare a profit…
- or loss, the outstanding liabilities must be reinsured away, generally although not always to the next open year of account.
What is underwriting?
The process by which an underwriter assesses the acceptability and/or price of the insurance - the transfer value or the risk.
What is Loss modelling?
- AKA catastrophe or exposure modelling
Insurers plot their exposures and try and ascertain the largest loss they might have in various combinations.
What is a Rating model?
A means of calculating a premium based on an estimate of the expected loss cost for a risk.
