What is the main objective of insurance programme design?
To structure cover, retentions and insurer participation so the client’s risks are managed cost‑effectively and appropriately.
List four key questions in programme design.
How much risk to retain; whether to package/combine risks; how long the programme should run; and how to achieve required limits.
For simple consumer or micro‑business risks, how are needs usually met?
By standard policies with little bespoke programme design.
For larger, more complex clients, what does the broker usually design?
A tailored insurance programme rather than a single standard policy.
In UK insurance, what is an excess?
The amount of each claim the insured must bear, with the policy limit usually inclusive of the excess.
What is a deductible and how is it often used in UK practice?
Originally a US term for excess; now used interchangeably in the UK, but must be clearly defined in the policy.
How can a deductible operate differently from a simple excess?
The policy limit can either be inclusive of the deductible or sit entirely in excess of it.
What does ‘self‑insured retention’ normally mean in UK usage?
The amount of risk (excess/deductible) the insured retains within the programme.
Why must the operation of an excess or deductible be made perfectly clear?
Because it affects how much of each loss the insured retains and how layers above attach.
Under a corporate deductible, what must NOT happen in local policies?
Local subsidiaries must not insure the corporate deductible, e.g. by ‘buy‑back’ cover.
What is the basic trade‑off when setting a deductible level?
Higher deductibles give lower premiums but more retained risk; lower deductibles give higher premiums but less retained risk.
Besides premium savings, what should influence the chosen deductible?
The client’s financial strength, risk appetite, loss history and operational tolerance for volatility.
What is the purpose of aggregate deductibles or annual aggregates?
To cap the total amount the insured retains in a year so very bad years do not become unaffordable.
What is the aim of claims analysis in programme design?
To identify trends in losses and see how different deductible levels would have affected historic claims.
What extra claims data is useful for larger clients beyond a simple summary?
Details of uninsured losses, a full claims listing and, for liability, development triangles.
Why are uninsured and below‑excess losses important in analysis?
They show the full loss picture and are essential when modelling higher retentions.
What does deductible analysis specifically illustrate?
How past claims would have split between the insured and insurers under various deductible scenarios.
What is an insurance ‘package’ policy?
A policy combining several classes (e.g. property, theft, money, glass) into one combined contract.
Why do insurers use package policies for small businesses?
Administrative convenience, economies of scale and marketing appeal.
What is ‘account underwriting’?
Placing all or most of a client’s insurances with one insurer under a broad relationship.
Give one advantage of placing all covers with one insurer.
Stronger relationship, possible premium discounts, and easier administration.
Give one disadvantage of placing all covers with one insurer.
Reduced competition and dependence on a single insurer’s appetite and security.
What is a cross‑class retention?
A deductible or aggregate that applies across several classes in a package rather than separately to each.
Name one advantage of cross‑class retentions.
Economies of scale and a lower overall aggregate than separate class aggregates.
