Chapter 9: General Business Environment

Question 1

What are the factors affecting supply of HC?

Answer 1

• Tax levels
• Ageing population
• Taxable workforce (size)
• Inflation (of treatment) due to medical advancements
• Sales regulation and disclosure

Question 2

What are some common regulatory restriction on insurers?

Answer 2

TRAP DUAT
T: Type of contract a life insurance company can offer. E.g there may be a special license that you need to sells certain types of products
R: RATING FACTORS: Restrictions on rating factors used to calculate premiums
A: Restrictions on types of assets or amount of any particular assets
P: Premium rates, charges
D: Restriction on dbn channels (sales procedures, training requirement, cool-off period, right of cancellation)
U: Restrictions on ability to underwrite (to avoid discrimination)
A: Indirect constraint on amount of business (minimum reserving and SCR)
T: Terms and conditions (e.g how paid up policies and surrender values are to be calculated)