Seminar Questions Flashcards
What is soft vs hard market?
Soft- low premiums, try for customers, underwriters relaxed, broad coverage
Hard- High premiums, insurers compete for customers, less coverage, worry about profit
What are 3 ways in which insurance markets can help switch between soft and hard markets?
Increase risk management, keep capital reserves, use reinsurance to keep risk low
Proportional and non-proportional are apart of what and are /broken into what 2 sectors
Reinsurance contracts.
Proportional
Quota share (35% premiums for 35% loss)
Surplus share (when the amount exceeds a insurer, reinsurer steps in to pay pre agreed above)
Non-proportional
Stop loss
(like quota share but can pay risk even if the 35% claims is over)
excess of loss
(stops catastrophic losses from earthquakes )
What are the 5 different reinsurance contracts?
- Treaty
- Proportional
- Non-proportional
- Pooling insurance
- Facultative
What is meant by Treaty in reinsurance terms?
Its an agreement to an area such as proportional or non-proportional
What is a facultative contract in reinsurance?
When an insurer must take out different contracts for different risks
What is stop loss?
A non-proportional contract under treaty with a reinsurance, the quota share is exceeded and so reinsurance will still pay.
What is the fraud triangle?
A way for insurance to avoid people committing insurance fraud as well as trying to understand it and speak out about it.
It consists of:
Pressure (Support them, financially support too or reduce motivation to commit fraud)
Opportunity (implement oversight of devices and certification process)
Accessibility (Push information about fraud, be tight on policy and make sure customers know about the risk involved with committing insurance fraud)
What is proprietary insurance?
When the shareholders of a company set up an insurance group for their company to use.
What is mutual insurance?
When a policy is sold, the shares are also given out, it spreads risk and invites those from outside to invest in spreading risk. (not tied to specific company, therefore many may come together to form it which serves their collective needs)
What is captive insurance?
It’s created by a company to specifically serve them. (no outsiders unlike proprietary and mutual)
You set up a company, however you fail to repay Connor Laird £25,000 on time for a third payment on your Ferrari, your insurance pays, what type of insurance has covered this?
Payment Protection insurance
Insurance marketing team is going to advertise a product, who may the marketing team work alongside to ensure the product is as advertised?
Actuaries, underwriters and the risk management team
