Reasons why an insurer would not take 100% of a risk
Capacity
Appetite
Aggregation (Accepting risks that would be exposed to one event, such as an earthquake)
Broker Influence
Insured’s Influence (preference bye client)
What is the name of the electronic placing system used in the London Market
Placing Platform Limited
Rating agencies
Consider the financial position of the insurer, as well as management and operation of the whole business.
Rating agencies compare insurers to its peer group in the market that is of similar size and structure
Why is the choice of a slip leader important
they should set good terms and conditions for the client
They should be credible to other insurers so that a following market will support the leader and the rest of the risk
Four outcomes that regulators focus on around consumer duty
The products and services being provided
Price and value
Consumer understanding
Consumer support
Exposure modelling & PML (Probable Maximum Loss)
Looks at the combined different risks written by an insurer to see the areas with high concentration
PML - Realistic likely maximum loss
This can be used to calculate how much reinsurance should be purchased
Loss Modelling
The process insurers use to predict the frequency and cost (Severity) of potential claims, especially from major catastrophes
Catastrophe modelling
The non-financial impact of catastrophes occurring.
E.g. Claims volumes increasing
Law of Large Numbers
as an insurer insures more people (a larger pool), the actual losses experienced will more closely match the expected average, making risk predictable and allowing companies to set accurate premiums
What is the premium based on for the following:
Employers Liability Insurance
Products/Public Liability Insurance
Professional Indemnity Insurance
Employers Liability - Payroll
Products/Public Liability - Turnover
Professional Indemnity - Fees earned
