Week 4: pricing risk Flashcards
1
Q
insurance price
A
actuarial fair premium + uncertainty + unloading
2
Q
risk management (during transfer)
A
risk analysis
health and safety recommendations
writing the insurance contract
3
Q
risk management (after transfer)
A
monitor recommendations
assets - liability management
4
Q
problems with pricing major injury risk
A
potential liability varies according to:
- nature of injury
- health care costs (inflation)
- litigation - special damages (direct costs, medical bills, loss of earnings)
- general damages: pain and suffering (nightmares)
- psychological: may occur again
5
Q
how can risk be evaluated?
A
by looking at the variability of losses around the expected (average) loss
6
Q
variance
A
the average square mean minus deviation
7
Q
standard deviation
A
the square root of variance
