Tutorial 1 Flashcards
1
Q
List 4 groups may life insurance actuaries carry a responsibility
A
- Client / employer
- Policyholders
- The actuarial profession (incl. public interest)
- The regulators
2
Q
Explain how the early life insurance companies tried to reduce lapse rates in the industrial branch
A
By making commission related to premiums collected rather than basing it on new business sold.
3
Q
Outline the risk for the individual in respect of a contract of indemnity insurance
A
- Has reduced exposure to risk
- The chanse of the insured event occurring is unchanged, but the individual has exchanged the uncertainty of a large loss for the certain loss in respect of premium payments
4
Q
Outline the risk for the insurer in respect of a contract of indemnity insurance
A
- Has accepted the risk of having to pay out more than expected
- The larger the group insured the more predictable the outcome should be
- The insurer is also exposed to risks such as high running expenses, moral hazard, etc.
5
Q
Outline the risk for the country as a whole in respect of a contract of indemnity insurance
A
- The total number of occurrences of losses will be (approx.) unchanged
- Total costs will have increased as insurers will have expenses and profit requirements (individuals less careful)
- Presence of insurance benefits the country as it aids the development of businesses
- Insurance should be a more efficient way of managing the problem than each individual setting aside enough capital to cover any risks.