2. External environment

Question 1

Legislation

Answer 1

Primary law formally declared by parliament/other governing body

Question 2

Regulation

Answer 2

Secondary legislation used to implement primary legislation

Question 3

Effects of state benefit provisions

Answer 3

• People may need to provide less for themselves
• May lead to lack of savings incentive
• May lead to morale hazard

Question 4

Underwriting cycle

Answer 4

Profitability goes in cycles driven by forces of supply and demand with actual claim and economic climate

• Market profitable
• New entrants
• Reduced premiums
• Reduced profits
• Companies exit/reduce involvement
• Premium rates increased/ loss of business/reduced solvency

Question 5

Factor through which technology impacts a financial providers’ operations

Answer 5

• Information processing
• Information distribution
• Policy administration
• Claims administration
• Marketing channels
• Distribution channels
• Target market