Tutorial 3 Flashcards
Describe the length of tail:
Employer’s liability insurance
long
Describe the length of tail:
Property insurance
short
Describe the length of tail:
Motor insurance: damage to property
short
Describe the length of tail:
Motor insurance: third party liability
long
Describe the length of tail:
Marine insurance: hull
short to medium
Describe the length of tail:
Aviation insurance: cargo
short
4 Main types of property insurances
- Domestic buildings
- Domestic contents
- Commercial buildings
- Commercial contents
Domestic buildings insurance type of cover
Reinstatement cover
Domestic contents insurance type of cover
Reinstatement or indemnity cover
Commercial buildings insurance type of cover
Reinstatement
Commercial contents insurance type of cover
Indemnity
Explain how significant the difference is between original terms and risk premium reinsurance in:
- a with-profit endowment assurance
OT - proportion of sum assured payable throughout
RP - amount reinsured reduces as the reserve under the contract increases towards sum assured
Risk premium would be used as the reinsurance company would not want to have to make a payment that was dependent on the amount of bonus you have declared.
Explain how significant the difference is between original terms and risk premium reinsurance in:
- a term assurance
Not much difference in OT and RP as the reserves under a term assurance policy are small.
OT is often preferred for its simplicity.
Explain how significant the difference is between original terms and risk premium reinsurance in:
- a unit-linked whole of life protection policy
OT is not available on unit-linked business as no reinsurer would be prepared to agree to match your unit performance.
Thus RP would be used.
