Reinsurance

Question 1

capital markets are

Answer 1

markets for buying and sei=lling securities of medium and long term investments

Question 2

suppliers of capital

Answer 2

retail investors
institutional investors

Question 3

users of capital

Answer 3

businesses
governments
individuals

Question 4

a low take up rate of INS demonstrates

Answer 4

an underinsurance gap when comparing premium to gdp

Question 5

when an ins product or risk capital is in demand pricing

Answer 5

increases

Question 6

when supply of risk capital increases, pricing

Answer 6

decreases

Question 7

factors that increased the supply of risk capital in past decade

Answer 7

better risk modeling
low interest rates pushed investors to seek returns in risk capital market
wider diversification of benefits

Question 8

collateralised reinsurance

Answer 8

put money into a sperate account to collaterize funds

Question 9

combined ration =

Answer 9

losses + expenses/premium
insurers aim for < 100
< 100 means business is profitable and pricing is accurate

Question 10

1 in 250 year exposure

Answer 10

probability of a loss occuring is 1 in 250 years

Question 11

catastrophe bonds

Answer 11

work on a named peril basis, cover many residential risks - losses minimal in pandemic era

Question 12

sidecar bonds

Answer 12

issued after a shock loss, used by reinsurers to cede risk to investors who place sufficient funds in the vehicle to ensure that claims are paid
insure commercial business and broader exposures - more susceptible to loss during pandemic

Question 13

impact of hurricane ian on cat bonds

Answer 13

had large impact on all cat bionds as a whole because losses were so great that it impacted the entire market and demand for cat bonds increased causing prices to skyrocket