Study 1 - The Commercial Insurance Context Flashcards
How did Blockbuster adapt to a changing market?
DVD players were introduced and they adapted for DVD rentals over VHS rentals
What three categories play a major role in evolution of a business?
Technological developments
Climate risk
Globalization
What do technological developments improve?
Business processes
Productivity
Efficiencies
People’s personal lives
What were the four major technological revolutions?
Industrial revolution (1760-1840)
Technical revolution (1870-1920)
Scientific/technical revolution (1940-1970)
Information & telecommunications revolution (1975-present)
Explain the impact of the industrial revolution
- Transitioned to new manufacturing processes spurred by technological innovations
- Productivity increased; many jobs replaced by machines
Explain the impact of the technical revolution
- Improved communication increased distribution of scientific theories
- Advancements in technology began to meet needs faster
Explain the impact of the scientific/technical revolution
- Global events spurred the necessity of technological solutions
- The modern era of computers was triggered
Explain the impact of the information & telecommunications revolution
- Technology has become faster, more efficient and more portable
- The virtual world is ever expanding, bringing the world closer together
What are two key inventions during the industrial revolution?
Spinning jenny & the light bulb
What are three concerns for businesses with the development of technology?
- Goods being carried across larger distances have an increased potential for damage from accidental vehicle upset
- Mechanical breakdown of production line equipment could lead to huge repair costs and loss of contracts
- Personal data and sensitive information are prone to electronic data theft, and network systems are susceptible to cyber attacks
What are some examples of what could be covered under cyber insurance?
- Cost of a professional firm to replace lost or corrupted data
- Loss of business income and extra expenses incurred while the system and data are being recovered
- The cost of a public relations firm to communicate with outside parties regarding cyber attack
- Data recreation costs from non electronic sources
- Defence and liability costs arising from an action alleging system security failure, including settlement and judgment costs
How has technology helped make policy issuance, claims handling and risk analysis easier?
- Delivery of policies has evolved from handwritten to eDocs or electronic formats
- Complex integrated policy management systems and claims handling systems have been developed to reduce handling times
- Automated underwriting can be accessed by anyone on the Internet, claims can be reported, analyzed and paid through an app
What are some factors businesses must consider in relation to climate risk?
- Their physical location and its ability to withstand environmental conditions
- Their business activities and employees
- The length, location, and diversity of their supply chain
- Their customer base
What are some examples of climates that could have a negative impact on business operations?
Flooding, strong winds, hail storms and droughts
Define direct writer
Insurance company selling directly to the public and not through independent agents or brokers
Define insured
Any person or corporation covered by an insurance policy. In some policies, the term may be defined exhaustively to limit the coverage or defined broadly to expand coverage
Define insurer
The insurance company that undertakes to indemnify for losses and perform other insurance-related operations
Define loss ratio
The ratio of total losses paid out in claims plus adjustment expenses divided by the total earned premiums. Usually expressed as a percentage
Define broker
Licensed independent person or firm who acts on behalf of an insured in placing business with insurance companies
Define producer
A broker or an agent who sells insurance
Define reinsurance
Insurance purchased by an insurance company from another insurance company
Define cede
An insurer’s transferal or signing over part of an insurance risk to a reinsurer
What are some examples of “supporting players”?
- Independent adjusters
- Inspection companies/independent inspectors
- Preferred contractors/restoration companies
- Preferred repair garages
- Education and data-collection companies (Insurance Bureau of Canada, Insurance Institute of Canada, Fire Underwriters Survey, etc)
Define premium
Price of insurance protection for a specific risk for specific time