1.3 Achieving Insurer Goals

Question 1

What internal constraints do insurers face?

Answer 1

1) Efficiency
2) Expertise
3) Size
4) Financial Resources
5) Lack of brand name
6) Damaged reputation

Question 2

What factors can make an insurer inefficient?

Answer 2

1) Poor management
2) Insufficient capital
3) Lock of information technology
4) Inability to adapt to change

Question 3

How does size effect an insurer?

Answer 3

Large companies have economies of scale and have more money to invest but aren’t very nimble. Smaller companies can quickly respond to the market but don’t have the money for big investments.

Question 4

What external constraints do insurers face?

Answer 4

1) Regulation
2) Rating agencies
3) Public opinion
4) Competition
5) Economic conditions
6) Insurance marketing and distribution

Question 5

What is a hard cycle?

Answer 5

Decreased competition, rising rated and high rates of returns

Question 6

What is a soft cycle?

Answer 6

Prices moderate or decline, competition increases, profitability diminishes

Question 7

How does inflation effect insurance companies?

Answer 7

Greater premium but losses cost more the were calculated previously