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Ioanna Final > Acronyms > Flashcards

Acronyms Flashcards

1
Q

Key risk types

A

M LOGIC

Market

Liquidity
Operational
Group
Insurance (UW + Reserve)
Credit
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2
Q

Objectives of regulation

A

PM CAM HERE

Protect policyholders
Manage risk

Create liquidity
Allocate resources efficiently
Mobilise long-term savings

Help growth & competition
Efficiency of the financial system
Reduce transaction costs
Economies of scale in investment

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3
Q

Criteria for an exposure measure

A

MAD NOVAE

Measurable
Acceptable to the market
Defines the risk

Non-manipulable
Objective
Verifiable
Acceptable to the policyholders
Easy to obtain
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4
Q

Stakeholders of a general insurance company

A

MR CAPERS

Management
Regulators

Credit rating agencies
Auditors
Policyholders
Employees
Reinsurers & brokers
Shareholders
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5
Q

Disadvantages of regulation

A

CCOB PILE

Costs
Complex capital calculations
Opportunity cost
Barriers to entry

Premiums increased
Investment return lower
Less insurance coverage
Economies of scale (fewer)

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6
Q

Claims analyses

A

PRINCE RAN

Partial payments
Re-opened claims
Impact/incidence of large claims
Nil claims
Changing frequency & severity
Expenses vs indemnity cost

Recoveries on gross claims
Assessing concentrations
New claim types

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7
Q

Reinsurance analyses

A

PEA CRAVE

Profitability of layers
Effects on capital
Appropriateness of cover

Catastrophe reinsurance
Reinstatements
Amount of risk to retain
Value for money
Extent of accumulations
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8
Q

Factors affecting data

A

SEMI COMA

Size of company
Existene of legacy systems
Management and staff
Integrity of data systems

Class of business
Organisation (nature of)
Method of sale
Age of company

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9
Q

Investment and capital analyses

A

RICE AD

Risk assessment
Investment policy
Capitla requirements
Evaluate existing portfolio

Allocate capital between classes
Determine return on capital

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10
Q

Experience analyses

A

PEACE REP

Pricing and sales of policies
Environmental changes
Anything else the management require
Claims reserves estimation/claims experience
Expense analysis and allocation

Risk exposure and aggregations
Estimation of claims trends
Policyholder behaviour

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11
Q

External environment factors

A

ELASTIC WIG CLUB

Exchange rates
Legislation
Awareness of ability to claim
Seasonality
Technological change
Inflation
Court awards

Weather
Investment conditions
Global warming

Catastrophes
Latent claims
Underwriting cycle
Behavioural trends

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12
Q

Criteria for an insurable risk

A

MUD PIS

Moral hazard avoided
Ultimate limit to liability
Data available to assess the risk

Probability of occurrence is low
Independent risks
Similar risks pooled

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13
Q

Reasons for purchasing reinsurance

A

PASS D LIFE

Profitability (increase)
Avoid single large losses
Smooth results
Solvency (improve)

Diversification

Limit exposure to single events or accumulations
Increase capacity to accept risk
Financial assistance
Expertise

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14
Q

Problems with inwards RI reserving

A

CIG BLUSH

Cedants use different reserving bases
IT constraints
Grouping of data

Benchmarks less relevant
Longer reporting delays
Upwards development of claims
Sparse data
Heterogeneous exposure
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15
Q

Features of a good model

A

FUR VAN UP CAVE

Flexible
Understandable by managers
Reflect risk profile

Valid
Adequately documented
Not overly complex

Uncertainty should be verifiable
Parameters identified and justified

Complete
Appropriate parameters
Verifiable
Easy to communicate

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16
Q

When to allow for diversification

A

BRA APPS

Business planning & strategy setting
RI purchasing
Asset allocation

Assessing solvency
Performance measurement
Pricing
Studies of enterprise level risks

17
Q

Assumptions needed for capital modelling

A

REDUCE DOG CRITICS

RI share of ultimate claims & RI bad debt
Exhaustion of reinsurance and reinsurer
Downgrade assumptions
Ultimate gross claims (including CHE)
Ceded premiums
Expenses

Dividends
Operational losses
Gross written premium

Catastrophe claims
Reserve movements (gross), by COB
Inflation
Tax
Investment returns, split by asset class
Claims payment profiles
18
Q

Data needed for capital modelling

A

RUDE CCALF PUP

RI programmes
Unpaid gross claims
Details of operational risks
Expenses

Claims payment profiles
Credit exposures
Asset values
Large losses
Future reinsurance costs
Planned premiums (gross and net)
Unexpired premiums (gross and net)
Planned RI programmes
19
Q

Categories of uncertainty

A

MR DAMPP

Model error
Random error

Data errors
Adjustment factors
Market conditions
Portfolio movements
Parameter error
20
Q

Capital modelling uncertainty

A

MIS PPIPI

Model
Incorrect dependencies
Simulation

Parameters
Programming
Incomplete data
Poor data
Inconsistent data
21
Q

ROC uncertainty

A

CGI MICE

Competition
Globalisation
Insurance cycle

Margins on premiums
Investment returns
Claims
Expenses

22
Q

Reserving uncertainty

A

DAD CRAB ALBUM CD INFECT CALF

Demand surge
Area (globalisation)
Distribution channels

Climate change
Reserving philosophy
Assumption on distribution
Behaviour of third parties

Arrangments of profit shares
Legislation
Bodily injury claims
Unusual/large risks
Mix of business

Competitive pressure
Development patterns

Inflation
New classes
Format of data
Economic conditions
Catastrophes
Third party handlers

Claim handling procedures
Amounts of claims
Latent claims
Frequency of claims

23
Q

Investment uncertainty

A

GO TEAR

Globaliisation
Overseas influences

Type of investment
Economic cycle
Actions by central bank
Return

24
Q

Expenses uncertainty

A

A BEAN TOLD

Aggregators

Broker power
Economic conditions
Accounting charges
New markets

Tax
Off-shoring
Levies
Distribution channels

25
Q

Factors affecting investment strategy

A

REC CARTOONS ADVENTURERS

Restrictions - statutory/legal/voluntary
Economic outlook
Credit rating

Currency of existing liabilities
Accrual of liabilities in the future
Risk appetite
Term of existing liabilities
Objectives
Other insurers (competition)
Nature of the liabilities
Size of free assets
Availability of assets
Diversification
Valuation requirements
Existing portfolio
Non-investible funds
Tax treatment of the assets/insurer
Uncertainty of the liabilities
Reinsurance
Expenses
Return (expected long term)
Solvency requirements)
26
Q

Reserve estimation analyses

A

A LIP

Accuracy assessment of previous reserve estimates

Liabilities determination in published, solvency and management accounts
Insurer valuation for purchase or sale
Provide management information on performance and profitability

27
Q

Presenting analyses results

A

MASKA

Methodologies and definitions used
Assumptions reliance and uncertainty of results
Source of data, its preparation and verification
Key features of the results and why they have happened
AvE

28
Q

Claims characteristics

A

CRAFT CRAMPS VENDS DRILLS

Catastrophes
Reporting delays
Accumulations
Frequency
Trends  
Currency 
Reinsurance
Amount (severity)
Moral hazard
Partial payments
Settlement delays 
Volatility
Event delays
Nil claims
Definition
Seasonality
Distribution
Reopened claims
Inflation
Large claims
Latent claims
Salvage and subrogation
29
Q

Examples of regulation

A

SAD ADVERT PROMPTS ACIDIC CALM

Solvency level
Amount / type of business written
Disclosure

Auditing
Deposit assets to meet liabilities
Valuation basis (assets and liabilities)
Equalisation reserve
Risk-based capital calculations
Type / amount of assets for demonstrating solvency
Publish premiums
Reinsurance requirements
Offer required cover
Mandatory restrictions on cover
Premium rates
Treating customers fairly
Statement of actuarial opinion
Authorisation of companies / agents / management
Cooling off period
Illegal products
Discounting of liabilities
Information used in underwriting
Compensation scheme

Countries where business is written
Anti-competitive behaviour
Levies to consumer protection bodies
Mismatching requirements

30
Q

Methods of allowing for diversification in capital models

A

SLICE

Summing variances for deterministic models
Link assumptions
Implicit correlations
Copulas for stochastic models
Explicit correlations between distributions

31
Q

Uses of stochastic reserving models

A

I AIM UP ICECAP

Inform discussions with regulators

Allocate capital
Inform management/board for decision making
Monitor performance to see if claims movements material

Understand large loss exposure to inform RI purchasing
Price insurance and RI policies

Inform investment strategy
Calculate the reserving risk component within capital modelling
Estimate RI recoveries
Compare reasonableness of different estimates and datasets at different dates
Assess reserve adequacy in absolute and relative terms
Provide information to investors

Ioanna Final (1 decks)

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