Term
-pure premium method
-loss ratio method
-judgement method |
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Definition
| name 3 ratemaking methods? |
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Term
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Definition
| corporate objective of ratemaking is to be _____ and______. |
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Term
| adequate, not excessive, not unfairly discriminatory |
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Definition
| regulatory objectives of ratemaking are to make rates _________, ___ ______, and ___ _____ _________ |
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Term
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Definition
| what are ins rates functions of? |
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Term
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Definition
| are rates regualted by state or fed govt |
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Term
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Definition
| type of rate reg allowing company to begin selling ins products then file rates within a month |
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Term
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Definition
| strictest type of rate regulation? |
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Term
| mandatory bureau memebership |
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Definition
| rate regulation in which rates are decided by a group and MUST be used throughout the industry |
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Term
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Definition
| rate regulation where a commissioner must approve rates before they can be used |
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Term
| illinois, idaho, indiana, utah , iowa |
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Definition
rate regualtion:
5 states w/ most freedom to manage personal lines |
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Term
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Definition
ratemaking:
5 states w/ least freedom to manage personal lines |
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Term
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Definition
ratemaking:
what bill moved CA from most freedom to least in 1986 |
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Term
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Definition
ratemaking
asking someone in the industry to just sort of come up with a number? |
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Term
| Class rating (manual rating) |
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Definition
ratemaking:
form classes (groups of similar exposures) then come up with expected losses
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Term
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Definition
RM:
- go with avg except adjust for individual losses history
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Term
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Definition
RM:
create a risk pool to insure our own cars, at end of the year calculate total losses and then divide up costs among group |
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Term
schedule
experience
retrospective |
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Definition
RM:
3 types of merit rating |
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Term
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Definition
RM
price per exposure unit? |
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Term
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Definition
rm
costs of running ins company? |
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Term
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Definition
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Term
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Definition
rm
pure premium + loading= |
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Term
| profit loading in ratemaking formula |
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Definition
rm
how do ins companies ensure stockholders receive a profit/reward for investing |
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Term
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Definition
| when int rates go ____, premiums go _____? |
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Term
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Definition
§Premiums ß by amount of ______ ________earned on premiums
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Term
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Definition
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Term
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Definition
| who estimates reported unpaid losses? |
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Term
prospective loss costs
expense provision
profit and contingencies factor |
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Definition
rm
name 3 components of an insurance rate? |
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Term
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Definition
| what portion of insurance rate accounts for the costs of expenses, taxes, licensing fees, etc |
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Term
| policy year data collection method |
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Definition
| method where earned premiums, exposure units, and incurred losses are analyzed for a specific group during a 12 mo period |
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Term
| calendar year data collection method |
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Definition
RM
method that uses standard accounting data |
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Term
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Definition
| method of adjusting past data to reflect changes in frequency and severity |
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Term
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Definition
rm:
fixed amt of change each year |
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Term
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Definition
rm:
fixed % change each year |
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Term
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Definition
rm:
adjusts for changes in exposure or rate base |
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Term
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Definition
Can be determined by comparing the estimated loss ratio for each territory to the statewide average |
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Term
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Definition
| diff in rates btwn various classes or territories |
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Term
ISO-Insurance Services Office
AAIS-American Association of Ins Services
NCCI-National Council on Compensation Ins |
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Definition
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Term
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Definition
| incurred losses/ earned premiums |
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Term
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Definition
| 1- (expense ratio + profit) |
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Term
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Definition
| 1- (expense ratio + profit) |
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Term
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Definition
| level of confidence that available data accurately reflect expected losses |
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Term
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Definition
claims:
besides producer the ______ ________ is most visible to the public |
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Term
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Definition
claims:
highest satisfaction rating possible |
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Term
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Definition
claims:
t/f
most suits against ins company occur because ppol believe the comapny is dragging their feet? |
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Term
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Definition
what department:
- assists the customer in determining what claim they have
-educates cust on policy details
-notifies UW dept of mispriced policies
-ensures lasting r-ship w/ cust |
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Term
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Definition
claims:
who has authority from ins company to settle small claims |
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Term
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Definition
claims:
person used in area w/o large enough mkt to sustain full time ________
-in the aftermath of a hurricane to handle increased demand |
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Term
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Definition
claims:
this person is used when insured disagrees w/ amount given to them for loss by insurance company |
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Term
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Definition
claim:
this type of adjustor works on contingent fee, usually around ____%
- only useful when significant disagreement exists |
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Term
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Definition
| first step in claims process? |
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Term
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Definition
| for claim to be valid does loss have to occur during policy period? |
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Term
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Definition
claims:
must show ______ _______ at time of purchase to recieve any benefit |
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Term
| yes, insurable int at time of purchase |
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Definition
| if husband takes life ins policy out on wife while, then 3 mos later they divorce and she dies 2 yrs later, and husband still makes prem pmts, can he receive benefits |
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Term
| yes, cant make any claims unless you own it though |
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Definition
| can you purchase propty ins on any piece of propty you like regardless of ownership |
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Term
| allows for smooth flow of business transactions |
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Definition
| what does allowing propty ins to be purchased on any propty do? |
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Term
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Definition
| form stating that all info provided to insurer is correct and acceptable claim is offered |
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Term
| no they are included in the UPR |
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Definition
| are losses that have not yet occurred yet included in the loss reserves? |
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Term
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Definition
claims
paid loss+case reserve+IBNR= |
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Term
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Definition
setting reserves:
-sit down and write a number down
-can be by committtee
-base # on previous experience |
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Term
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Definition
setting reserves:
-we know on avg what we will pay per claim
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consider how many reported claims we currently have and multiply by avg amt paid per claim |
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Term
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Definition
setting reserves:
group claims based on diff values (such as age) |
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Term
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Definition
| type of reinsurance that focuses more on capital mgmt than risk transfer |
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Term
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Definition
| also known as finite reinsurance |
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Term
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Definition
| designed to smooth incomes by using the current years profits to pay for next years possible losses |
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Term
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Definition
-covers multi year period
premium held and invested by reinsurer
-returned to ceding company minus pre-dtermined profit margin |
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Term
1.end of period
2.ceding company suffers a loss |
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Definition
| -premium returned to ceding company when one of two things occurs |
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Term
-premium is returned
no risk transfer takes place |
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Definition
| financial reinsurance differs from traditional reinsurance because:? |
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Term
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Definition
| based on spreading of individual risks over time |
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Term
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Definition
type of reinsurance characterized by assumption of limited risk by insurer?
-multi year contract? |
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Term
| Loss Portfolio transfer(LPT) |
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Definition
| policyholder transfers outstanding claims reserves to the insurer |
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Term
| retrospective excess of loss covers (RXL's) |
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Definition
-offer broader spectrum of cover than LPT's
-often includes IBNR losses
-no transfer of outstanding claims reserves |
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Term
| multi-line/multi-year products (MMP's) |
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Definition
| -combine diff catagories of risk in one product? |
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Term
| multi-line/multi-year products (MMPs) |
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Definition
-bundling of diff catagories of risk in one product
-allow substantial risk to be transferred |
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Term
| multi-trigger products (MTPs) |
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Definition
two triggers for claims to be paid:
1.an insurance event (hurricane)
2.a non-insurance event (decline in financial or bond mkt) |
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Term
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Definition
| offers protection from disaster scenarios and price falls in equity or bond mkts in same financial year? |
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Term
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Definition
| a nontraditional reinsuracne agreement for a limited amt of risk |
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Term
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Definition
reins:
possibility an investment portfolio will yield a lower return than expected |
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Term
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Definition
| possibility losses will be paid more quickly than expected? |
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Term
| long-term protection, continual flow |
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Definition
| With a finite risk agreement the primary insurer get ______-______ _______ and the reinsurer gets a _______ ____ of premiums. |
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Term
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Definition
| the relationship between reins premiums and the reins limit reduces/increases the reinsurers potential UW loss? |
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Term
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Definition
| Are financial reins premiums are higher/lower than traditional reins premiums? |
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Term
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Definition
| T/F? Financial reins is intended for high severity losses? |
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Term
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Definition
| does a finite reinsurer share profits w/ primary insurer when it has a favorable loss experience or generates income through invetments? |
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Term
| profit sharing when favorable loss exp occur or investments generate income |
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Definition
| what sort of compensation do primary insurers receive for the higher than usual premiums associated w/ finite insurance? |
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Term
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Definition
| goal of this type of re is to incorporate adv of finite risk ins( mgmt of CF, smoothing income and profit sharing) w/ adv of transferring the risk through trad ins? |
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Term
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Definition
| mixture of ins, reins, and other RM techniques on a single policy? |
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Term
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Definition
RM data development
immature data are multiplied by a ______ _____ ______ to produce sound estimate of data that will result when loss has fully matured |
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Term
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Definition
RM data development
the purpose of _____ is to adjust the developed losses from the experience period to refelct conditions expected in future. |
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Term
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Definition
RM data development
________ _______ can be determined by comparing est incurred loss ratio for each territory to the statewide avg loss ratio. |
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Term
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Definition
RM in diff types of ins
an exp period of __-__ yrs is common for
auto and other types of liab ins |
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Term
1. legal requirements (5 yrs for fire)
2.variability of losses over time
3.credibility of resulting ratemaking data |
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Definition
RM in diff types of ins
3 factors in determining appropriate exp period |
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Term
| fire, inland marine, and auto physical damage |
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Definition
RM in diff types of ins
types of insurance where loss develpment factors arent as improtant and the CYM of data collection are used |
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Term
most types of liability ins
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Definition
RM in diff types of ins
type of insurance where loss develpment factors play a key role due to long delay in pmy of claims and use AYM of data collection |
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