Ri And Exposure Flashcards
0
Q
Xol reinsurance
A
- Allows an established company to write larger risks without incurring the full impact of claims.
- Companys retention in xol will grow reflecting;
- Improved capital
- Knowledge of portfolio over time
- Confidence in uws and internal systems
- Desire to retain high proportion of profit margin
1
Q
Types of reinsurance in the early years to later years
A
- Proportional ri tresties quota share or surplus provide enhanced capacity in the early years but may be replaced by more specific non proportional treaties, such as xol in the later years.
- In the early days there should be little significant accumulations, but exposures should be monitored to identify when cat catastrophe excess of loss may be required
2
Q
Stop loss
A
- Provide protection against the excessive accumulation of small loses rather than the cost of extremely large claims
3
Q
Underwriters most interested in RI for
A
- Aspects which permit or restrict risks
- Those which limit the impact of exceptional claims on the profitability of their account, referred to as the working covers or layers, which are intended for use or are exposed on a day to day basis
4
Q
Reinsurers responses will be based on
A
- Class of business, short or long tail Limits of liab or unlimited liability in the case of motor 3rd party bodily injury
- Risk profile-how current, planned exposures are distributed by
- limit of indemnity, si, trade activity, geographical location, any sig inclusions - exclusions, risk selection policy Aggregate exposures and breakdown of premium income
- Perceived quality of uw strategy, business targets, approaches to growth, profitability, pricing
5
Q
Claims data prime concern to reinsurers
A
- Will want to know; Incidence and cost of claims
- Speed of settlement and typical run off patterns
- Reassurance competancy of claims handling and estimate processes
- (Reinsurers will not soley rely on historic data, cat modellers for eg utilise location, vulnerability, stochastic stats rms etc, to generate cover options and prices
6
Q
Ri on long tail accounts - commutations
A
- El, accounts may require a recovery from a reinsurer 40 years down the line, if the reinsurer is in financial difficulty a commutation agreement may be agreed.
- This is where the contract is terminated for an upfront payment from the reinsurer.
- Not to be taken lightly as the insurer may receive little to cover all the claims a d or nothing if reinsurer goes insolvent.
- Periodic payment orders bring a surge in these requests
7
Q
- Appropriate control of exposure in terms of appetite and capacity
A
Clear understanding of insurers risk appetite
8
Q
Risk appetite
A
- To be provided to reinsurers yearly and to the uw strategy of ur unit
- Will contain definitions or target of excluded business,
- exposure limitations and typical or actual distributions eg number of policies by total sum insured
9
Q
Consistency and interpretation to estimated and possible maximum losses
A
- record keeping must be done, with all understanding how measures are calculated and recorded.
- Portfolio to be sub dived to highlight any exposure changes eg tradesmen account, hazard, application of heat or no heat used in trading activity.
- Property- values at risk in low-med- high flood risk areas.
- Property accounts in many countrys insurers require risk zoning ona global basis eg through mapping tools
10
Q
Accumulations and clashes
A
- Certain types of events can impact several classes at once- insurers often purchase el pl cover in anticipation of single events.
- Internal exposure monitoring must encompass: Potential product- class accumulations Ways in which exposures under diff classes accumulate or clash Any evidence of any new emerging hazards
11
Q
Accepting a risk outside of the uw strategy
A
- Doesnt fit the normal accpetance criteria, but there may be a legitimate reason to accept.
- Insurers could do the following; Request a special acceptance frm reinsurers
- Approach reinsurers for a facultive placement
- Propose coinsurance arrangement with other insurers
- Accept the risk to neg account (without benefit of protection)
12
Q
- Proportional ri tresties quota share or surplus provide enhanced capacity in the early years but may be replaced by more specific non proportional treaties, such as xol in the later years.
- In the early days there should be little significant accumulations, but exposures should be monitored to identify when cat catastrophe excess of loss may be required
A
- Types of reinsurance in the early years to later years
13
Q
- Allows an established company to write larger risks without incurring the full impact of claims.
- Companys retention in xol will grow reflecting;
- Improved capital
- Knowledge of portfolio over time Confidence in uws and internal systems
- Desire to retain high proportion of profit margin
A
Xol reinsurance
14
Q
Provide protection against the excessive accumulation of small loses rather than the cost of extremely large claims
A
Stop loss
15
Q
- Aspects which permit or restrict risks
- Those which limit the impact of exceptional claims on the profitability of their account, referred to as the working covers or layers, which are intended for use or are exposed on a day to day basis
A
Underwriters most interested in RI for
16
Q
- Class of business, short or long tail Limits of liab or unlimited liability in the case of motor 3rd party bodily injury
- Risk profile-how current, planned exposures are distributed by limit of indemnity, si, trade activity, geographical location, any sig inclusions - exclusions, risk selection policy Aggregate exposures and breakdown of premium income
- Perceived quality of uw strategy, business targets, approaches to growth, profitability, pricing
A
Reinsurers responses will be based on
17
Q
- Incidence and cost of claims
- Speed of settlement and typical run off patterns
- Reassurance competancy of claims handling and estimate processes
- (Reinsurers will not soley rely on historic data, cat modellers for eg utilise location, vulnerability, stochastic stats rms etc, to generate cover options and prices
A
Claims data prime concern to reinsurers
they Will want to know
18
Q
- El, accounts may require a recovery from a reinsurer 40 years down the line, if the reinsurer is in financial difficulty a commutation agreement may be agreed.
- This is where the contract is terminated for an upfront payment from the reinsurer. Not to be taken lightly as the insurer may receive little to cover all the claims a d or nothing if reinsurer goes insolvent.
- Periodic payment orders bring a surge in these requests
A
Ri on long tail accounts - commutations
19
Q
Clear understanding of insurers risk appetite
A
- Appropriate control of exposure in terms of appetite and capacity
20
Q
- To be provided to reinsurers yearly and to the uw strategy of ur unit
- Will contain definitions or target of excluded business, exposure limitations and typical or actual distributions eg number of policies by total sum insured
A
Risk appetite
21
Q
- record keeping must be done, with all understanding how measures are calculated and recorded.
- Portfolio to be sub dived to highlight any exposure changes eg tradesmen account, hazard, application of heat or no heat used in trading activity.
- Property- values at risk in low-med- high flood risk areas.
- Property accounts in many countrys insurers require risk zoning ona global basis eg through mapping tools
A
Consistency and interpretation - required consistent approach to estimated and possible maximum losses,
22
Q
- Certain types of events can impact several classes at once- insurers often purchase el pl cover in anticipation of single events.
- Internal exposure monitoring must encompass:
- Potential product- class accumulations Ways in which exposures under diff classes accumulate or clash Any evidence of any new emerging hazards
A
Accumulations and clashes
23
Q
- Doesnt fit the normal accpetance criteria, but there may be a legitimate reason to accept.
- Insurers could do the following) Request a special acceptance frm reinsurers
- Approach reinsurers for a facultive placement
- Propose coinsurance arrangement with other insurers Accept the risk to neg account (without benefit of protection)
A
Accepting a risk outside of the uw strategy
