chapter 5 Flashcards
(28 cards)
How is the underwriting department typically structured?
A: It has levels like Director, Head of Department, Class Underwriters, Supervisors, Underwriters, and Assistants.
What does each level in underwriting control?
A: Each underwriter has authority to make decisions, with the Director having the most discretion.
What is an underwriting manual used for?
A: It outlines how premiums are calculated based on factors like building type, occupation, and risk factors.
What is “pure risk premium”?
it’s the amount an insurer needs to collect just to cover the cost of paying claims—nothing extra.
What is a delegated authority in insurance?
A: It’s when the insurer allows outside entities to carry out underwriting or policy tasks under agreed terms.
What is the main role of actuaries?
A: Actuaries assess risks and set premiums for life and general insurance, predict losses, and manage solvency capital.
How do actuaries estimate the required solvency capital?
A: They use models to estimate business risks and worst-case scenarios, following the Solvency II Directive.
What is CAT modelling?
A: CAT modelling simulates catastrophic events (like floods or earthquakes) to predict potential losses for an insurer.
Why is market research important for insurance companies?
A: It helps identify customer needs, monitor product success, and formulate marketing strategies.
How does solvency impact insurance companies?
A: Solvency requirements ensure that insurers maintain enough capital to cover risks and claims, with Solvency II being a key regulatory framework.
What is customer relationship marketing in insurance?
A: It focuses on using customer data to build strong relationships and retain customers for longer periods.
What is the purpose of a strategy team?
A: A strategy team develops strategic plans for business growth, assessing areas like supply, demand, competition, costs, and investment.
Who develops the business strategy in small firms?
A: Senior managers and directors typically create the strategy.
What information is crucial during M&A negotiations?
A: Financial records, sales, staff numbers, service contracts, and regulatory status.
What tool can be used for strategic planning?
A: The SWOT model (Strengths, Weaknesses, Opportunities, Threats) helps structure strategic planning.
What does “white label insurance” mean?
A: Insurance products sold under another company’s brand, not the insurer’s own.
What is the role of the company secretary?
A: They manage company filings, board meetings, and legal compliance.
Who does the head of internal audit report to?
A: The audit committee chairman (non-executive director) and a senior executive (finance director or CEO).
What does the Facilities Management (FM) team do?
A: The FM team manages office space, property procurement, building maintenance, and safety. They also handle business recovery planning in case of emergencies.
What is delegated authority in insurance?
A: When an insurer gives another party permission to perform tasks like underwriting or handling claims.
What is a coverholder?
A: A party with significant authority under delegated authority, able to issue documents, quote premiums, or handle claims.
What is a scheme in insurance?
A: A specialised policy tailored for a specific group, often managed under delegated authority.
What is an MGA (Managing General Agent)?
A: A broker acting like an insurer under delegated authority – underwriting, marketing, admin – but not paying claims from their own funds.
What’s a line slip?
A: An agreement allowing multiple insurers to share a proportion of specific risks, placed in bulk for efficiency.
