General Insurance 🏠
Key features
Short term
Multiple claims
Claim amounts volatile & unknown
Delays (reporting & settling)==> Tail
Two main categories
Personal Lines
Commercial lines
Underwriting
Process
Peril>>Risk factor>> Rating factor>> Exposure>> Quote
Rating factors
Exposure
Allows for comparison of policies
Proportional to value of risk & time period involved
Key examples
Sex
Age
Car type
Location
Contract design
Premium setting
Risk premium= Exp. claim frequency X Exp. cost per claim
Competitive
Subsidise new business with renewal
Provisions
Outstanding reported claims
IBNR
Unexpired risk reserve
Catastrophe reserve
Claims handling expense
Investment strategy
Cash (liquidity)
Domestic & overseas currency
Short term
Fixed interest bonds
Real assets
Constraints
Tax efficiency
Regulation
Free assets
Key risks
Claim frequency, amount, volatility, delays
Accumulations
Investment risks
Expenses
Poor persistency
New business strain
Credit risk
Operational risks
Mitigation
Limits
Excess
No claims discount
Exclusions
Loyalty programme
Underwriting
Reinsurance
Low risk target market
Types of General insurance
Liability
Property damage
Financial loss
Fixed benefit
Employers'
Public
Product
Professional
Motor third party
Buildings
Moveable
Motor
Marine
Percuniary loss
Fidelity guarantee
Business interruption cover
Personal accident
Health insurance
Unemployment