Operational Controls Flashcards
Variance analysis - differences between actual and bugeted figures Drivers of premium
No of quotations and conversion rate No of new business policies and averge prem No of renewed policies and average prem Renewal lapses and mid term cancellations Value of mid term adjustments Average rating increase - decrease achieved on renewal Individ large premium cases written
Monthly mgment accounts- you should receive the following figures
Written premium Earned premium Incurred claims costs Earned loss ratio All split by product scheme class intermediary, for month and year to date
Variance analysis Drivers of claims costs
No of claims 1st intimated No of claims settled No of open claims Total claims payments Changes in claims estimates - total and individ movements Individ claims exceeding a certain amount say 100k
Key variables and assumptions
Impact of economic growth / recession on claim frequency exposure sales Rates of inflation - claims and other Seasonality Allowances made for weather claims Internal consistency in claims reserving practice Mix of exposures type and size Implementation of planned rating and product changes and their impact on retention Market share Competitor activity including pricing
Claims reinsurance and exposure Monitoring
Uw must have approporiate access to results: ultimate claims costs, reserving patterns, ibnr ibner Examination of accident year important to distinguish current frm past performance Uw monitoring of ri arrangements. Fac arrangements and pool re to be monitored
People management Authority limits Uw license or authority
Personal uw license or authority is usually expressed in terms of various measures- max prem size, discount, tsi, eml, limit of liab, by class or product, with specific inclusions, exclusions, uw licenses set for a period of time, must be updated reconfirmed as appropriate.
Authority limits
Referrals and use of personal authorities must be documented Physical evidence case being handled in line with procedures Improve uws application of risks and market terms Share experience and knowledge Have a second set of eyes review work from time to time
Referrals
Refer risks for sign off Important means of sharing knowledge and best practice
Peer review / local audit
Colleagues or teams swapping a number of files on a weekly or monthly basis to confirm compliance with operational, regulatory and other standards. Key areas for congradulation or improvement must be reported and fed into risk management process
Regional audit
Risks should be selected across all categories, including a few risks already audited locally Opportunity to dicuss claims, surveyors, current market conditions. Should be fed into the corporate risk mgment process
Monthly results - variance analysis
Review of monthly results to explain variances and highlight individ risks or categories of risk which merit further examination
Other auditors Internal - external audits
Internal - interested in how effectively policies and strategies and procedures are developed, communicated, implemented, monitored. External review and comment on key issues eg uw performancr and the run off of reserves- need to confirm financial results correct
Audits Regulators Reinsurers
Reinsurers will conduct audits from time to time, particuarly if the account is changing growing rapidly or performing badly
Delegated authority
Small scheme binders ro mgas Require appropriate uw authorities and audit arrangements Approval for named signatories only to bind Insurer wholly responsible in eyes of regulator
Written premium Earned premium Incurred claims costs Earned loss ratio All split by product scheme class intermediary, for month and year to date
Monthly mgment accounts- you should receive the following figures
