Risk transfer Flashcards
1
Q
Responses to risk
A
Transfer
1. Transfer
2. Reduce
3. Avoid
4. Accept with limited financial coverage
5. Split
6. Retain
2
Q
How to choose mitigation
A
Frequency
1. Frequency and severity
2. Feasibility of implement
3. Secondary risks
4. Cost and impact on profit
3
Q
What are the things to consider when thinking of transferring risk.
A
- Probability of risk occurring
- Risk appetite
- Cost of transferring vs retaining
- Third party willingness
4
Q
Reinsurance cost
A
Premium
-loadings - profit and contingencies
5
Q
Reinsurance benefits
A
Vliced
1. Reduced claim volatility
* smooth profits
*less cap requirements
*write more business
2. Limit large losses
3. Insolvency
4. Capacity to write larger risks
5. Expertise
6. Data
6
Q
Benefits of ART
A
Crusts
- Capital source
- Cheap fover
- Risk management
- Unavailable
- Solvency
- Transfer
- Security (payment)
- Stabilisation
