Week 2 Essay question

Question 1

Essay number 2 is what and where?

Answer 1

The essay in underwriting and pricing of insurance and is on buddy’s walk (from the front drive)

Question 2

What will you talk about in essay 2?

Answer 2

Intro

The role of underwriting ((spiel))
(risk assessment, accepting risk and limit, collaboration of actuaries)

The process of pricing
((actuarial science and statistics play part))
(Law of large number and relative frequency of occurrence)
(internal and external factors)

The underwriting cycle
(soft and hard markets)

Reinsurance
(proportional and non proportional)

Challenges in underwriting and pricing
(Moral hazard, adverse selection and correlated loss)

Conclusion

Question 3

What might you talk about in proportional and non proportional?

Answer 3

Proportional (Quota share where if insurer retain 40% of risk, rein insurer takes 60% of premiums and claims and surplus share where the insurer and reinsurer know what percentage they are paying above the loss)

non-proportional (stop loss which covers above a loss ratio like will cover 80% of claims above 90% and excess of loss the reinsurer will pay above the insurers limit such as a £1 million limit the reinsurer will pay the above)

Question 4

What will you discuss in risk assessment?

Answer 4

This is the underwriters ability to assess the risk of a current or potential policy holder, the underwriter will look at your background, physical conditions, moral hazard and possible material facts, this will allow them to calculate your overall risk to them.

Question 5

What will you discuss in Risk acceptance and limits?

Answer 5

The underwriter has to look at how far a risk they are willing to take with you, they like mentioned will look at physical condition, background, moral hazard and material facts. If you are deemed more a risk, the underwriter may decide to charge you higher in premiums and deductibles to balance your risk.