Insurance

Insurance

1. Terminology

   • Provider
     • Insurer
     • Underwriter
   • User
     • Insured
     • Policyholder
   • Insurance Policy
     • Insurance contract.
   • Premium
     • Fee paid by the insured.
   • Underwriting
     • The act of ccepting a risk (guarantee payment in the case of damage) in exchange for a premium. It's the high-level term of the business that an insurer does.
   • Claims Adjuster
     • A.k.a. loss adjuster. Individual doing claim handling/adjustment. May be employed by an insurer (advocating the insurer's interest) or by an insured making a claim (advocating the insured's interest). In the latter case, it is called a public adjuster.
   • Public Adjuster
     • An individual or company advocating the insured in an insurance claim process (creating and handing in the claim to the insurer on behalf of the insured).
   • To underwrite a customer
     • Insurer making a contract (insurance policy) with a customer.
   • Insurance Agent
     • Works for a specific insurance company and sells policies to customers.
   • Insurance Consultant
     • Independent company finding the best insurance policy for a customer for a fee from this customer. Independent individual or company assisting customers to find the best insurance policy and getting a commission from the insurance company for a sold policy.
   • Insurance Broker
     • Independent company finding the best insurance policy for a customer and getting a commission from the insurance company for a sold policy.

2. Business Model

   • Underwriting profit = collected premiums - claim payouts - administration expenses
     • Core business of an insurer. Underwriting profit if >0, underwriting loss if <0.
   • Investment profit = investment income - investment loss
     • Auxiliary business of an insurer.
   • Optimisation
     • Increase customer satisfaction
       • To retain and get new customers in order to increase collected premiums. This includes balancing the payout sums of claims (and acceptance of claims) with the risk of claim overpayment.
     • Reduce administrative expenses
       • Handle claims as efficiently as possible. That is, reduce the amount of human labour put into the handling of a specific claim.
     • Reduce claims ovrerpayments
       • Includes the detection of fraudulent claims.

3. Tasks

   • Ratemaking
     • Actuarial science (Versicherungsmathematik, Aktuar).
   • Claim handling
     • Claim handling, claim adjustment. Investigating insurance claims by interviewing the claimant and witnesses, consulting police and hospital records, and inspecting property damage to determine the extent of the company's liability.
     • Segmentation
       • Divide claims into categories and handle them in streamlined specialised processes.

4. ACORD

   • Association for Cooperative Operations Research and Development https://www.acord.org/American Standardisation body for the global insurance industry. Started by standardising insurance claim forms in 1970. Members are insurance companies, solution providers (e.g. software), and associations.

5. Types

   • Property and Casualty (P&C)
     • Casualty Insurance
       • Crime, accidents.
     • Property Insurance
       • Natural catastrophes, fire, theft, etc.
     • Liability Insurance
     • Health Insurance
     • Credit Insurance
       • Repay loan when borrower is insolvent.
   • Life and Annuity (L&A)
     • Life Insurance
       • Payout to relatives after death.
     • Annuity
       • Get payout (usually regularly) after retirement (Pensionskasse).
     • Income Protection Insurance
       • Receive payouts when becoming disabled and not being able to work anymore.
   • Reinsurance

6. Related Business Types

   • Companies that are not insurers, but related to the insurance industry.
   • Brokers
     • Comparing and buying insurance policies from different insurance companies on behalf of a customer and getting a commission from the selected insurance company.
   • Consultants
     • Comparing and buying insurance policies from different insurance companies on behalf of a customer and getting paid by this customer.
   • Public Adjusters
     • Advocating an insured in an insurance claim  process.
   • Agents
     • Selling insurance policies for a specific insurance company.
   • Company Adjusters
     • Doing claim handling on behalf of an insurance company.
   • Solution Providers
     • Selling solutions to an insurance company (e.g. software).