Pricing Awareness Flashcards
What are the 4 main components of a premium?
claims payments, expenses, profit and levies
What are ‘Attritional Claims’?
claims of relatively low values which occur on a regular basis
What is the difference between a large claim and a catastrophe claim?
usually an accumulation of claims all arising from a common event. Large claims are substantial isolated losses
Provide 3 examples of a fixed cost:
salaries employees, utility bills, insurance costs, loan payments, advertising and rent
What does profit represent?
the return on capital which the shareholders expect for supplying it
Name the two organisations that insurers pay levies to?
MIB & FSCS
What is ‘Exposure Pricing’?
the process of determining the expected losses for a risk based on the portfolio claims experience of similar risks
What are ‘Subjective Risk Adjustments’?
risk factors that are not included or accurately reflected in the rating process or underwriting strategy applicable for the type of risk under review
What does the ‘Target Price’ consider?
the market conditions, in particular country and segment, the actions of competitors and plan and strategy
