Week 9

Question 1

What areas of insurance can reputation impact upon?

Answer 1

Valuation and profit

Question 2

Where might repetitional risk arrive from?

Answer 2

Reputation risk may arise from employees, the company actions, external actions or partners

Question 3

What are the two risks created by reputation risk?

Answer 3

Tangible (Quantitative- more insurable)

Intangible (Qualitative- less insurable)

Question 4

What might some repetitional triggers be?

Answer 4

Abuse, physical harm or emotional harm, risk by association

Question 5

Explain what first loss is?

Answer 5

When you insure part of something such as the roof of your house if you think wind damage will damage that so insurance will only cover your roof and not the entire house.

Question 6

Why might first loss be a huge problem for some insurers?

Answer 6

Because it is hard to measure risk in a first loss, since you are insuring only part of something. Since its hard to quantify, customers will likely go elsewhere

Question 7

Why is first loss a problem for actuary’s and underwriters?

Answer 7

Due to the less likely chance of covers, there will be less data to analyse.

Question 8

First loss, is difficult for quantification, for what two reasons?

Answer 8

Collection and capture of the data stops quantification and makes prices theoretical

Question 9

What is it called when another companies risk impacts another company?

Answer 9

Spill over risk

Question 10

How does repetitional insurance work?

Answer 10

During a companies reputation decreasing, they may receive funds (remember you could claim for over spill risk)

Question 11

Intangible assets make up what percentage of s&p500 company valuations

Answer 11

Intangible assets make up to around 90% of s&p500 intangible assets

Question 12

The FTSE350, reputation makes up how much of their market capitalisation?

Answer 12

around 30% is what reputation makes of market capitalisation in the FTSE350

Question 13

Reputation risk, Qualitative and Quantitative means what?

Answer 13

Quantitative means more insurable

Qualitative means less insurable

Question 14

What is tangible and intangible between qualitative and quantitative?

Answer 14

Quantitative is tangible

Qualitative is intangible

Question 15

What are the two meanings to First Loss?

Answer 15

1.Insurance may only insure selective parts of something such as a roof on a house and nothing more

2. The cap they will set. If they give you a cap of 5k and your damages cost 8k, they will only pay the 5k, the 3k left over is for you to pay

Question 16

What is loss predication?

Answer 16

Trying to predict and forecast future losses using past data/ historical data

Question 17

Why is having limited past data difficult for pricing?

Answer 17

Because largely you are guessing, you can’t really use loss predication as you do not hold past data that actuaries and underwriters could use to more accurately evaluate the risks involved.

Question 18

What is the problem with insurance groups having wording disputes with one another?

Answer 18

There is legal risk

Question 19

What is Quantitative assessment vs Qualitative assessment?

Answer 19

Quantitative assessment- More statical and numerical risk assessment such as money loss etc…

Qualitative assessment- More theoretical, less number based, what affected this, risk judgements etc…