General Insurance

General Insurance

1. Pricing

   • Hirearchy; Gross Ceded Technical price market price
   • 1. First, familiarise with the risk and (where applicable, such as in commercial insurance/ reinsurance) with the insured’s business. Then, 2. given information on claims, exposure and cover… 3. … estimate the cost of taking on the risk… 4. … take into account the related cost of running the business (underwriting, claims management, payrolling, etc.) and investment income… 5. … add an allowance for profit (which is constrained by capital considerations and therefore requires an input from the capital modelling function), thus obtaining the technical premium… 6. … and based on the technical premium and commercial considerations, determine the actual premium to be charged.
   • Approach
     • Frequency/ Severity
     • Burning cost
     • ILF/ Exposure rating
   • Data
     • Adjustment
       • Other corrections
         • i.e. Large or Cat claims  or some other adjustment seems appropriate
       • IBNR/IBNER
         • Either estimate it or exclude younger years
       • Inflation
         • CPI RPI Wage inflation Court inflation much more than that!!!!
       • Exposure changes
         • Even after inflation adjustment.....there might be some more trend which could be explained by exposure change
       • Risk profile changes
         • Risk management Tech development etc Personal lines:- gets captured in Rating factors. Commercial lines:- we need to investigate
       • Change in cover/legislation
         • for Example:- New peril is covered or change in deductible etc
       • Costing
         • Gross  Ceded
         • Technical price
           • Discounting
           • Tax
           • reinsurance cost
           • Cost of Capital
           • Profit
           • Commission/ brokerage
           • Commercial consideration
             • Insurance cycle
             • New business/ renewal
               • Price may very...if we are inclined to renew it since it is a profitable business. or attract new business
           • Admin or claims exp
     • Commercial lines
       • Submission by Insured
         • Claims
           • Invididual
           • Aggregate
         • Exposure

2. Products

   • Employers liab
     • unlimited cover
       • Insured can only keep risk...If ceded to a Captive.
     • payroll; exposure measure
   • Property
     • Property cover indemnifies the insured for loss or damage to the insured’s property, such as one’s house or one’s car. Indemnity based
     • Under insurance
     • Building and content
     • Commercial property
     • Marine Cargo
     • Aviation Hull
     • Motor OD
     • Livestock, blood stock
     • Crop
     • Travel and Transport
     • Construction
     • Engineering
     • Extended warranty
   • Liability
     • Tort Law; Negligence
     • Employer liab
     • Public liab
     • Product liab
     • Professiona indemnity
     • General liab
     • Aviation liab
     • Marine liab
     • Motor liab
     • Environmental liab
     • D&O
     • Heads of loss
       • cost of care
       • loss of earning
       • Financial loss
       • pain and suffering
       • Punitive demage(US)
       • legal and defence cost
       • property demage
   • Financial loss
     • Business Interruption
     • Credit and Surety
     • Mortgage indemnity
     • Fidelity guarantee
   • Fixed benefit
     • Persona acc
     • Health
   • Packaged

3. Extras

   • Legal Fee could be a fixed amount or a % of compensation etc.