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Insurance (Fundamentals of insurance (There must be a relationship between…

- - - - disability
        
        pays insured if they become unable to work due to illness or accident
      - annuities
        
        pays a benefit to the insured until death to cover retirement
      - life insurance which is paid off when the insurer dies
        
        whole life
        
        allows holder to borrow against the cash value of policy, insured can get the cash value of the policy back after expiration
        
        universal life
        
        includes both a life portion and savings portion
        
        Term life
        
        while policy is in effect, no savings element
    - - credit life
      - Group life
      - Ordinary Life
    - - sale of annuities
      - private pension plans
      - accident and health insurance
  - - - ensuring all American citizens had healthcare
  - - - protects risks associated with owning property, including replacement and loss of earnings from income producing property as well as financial losses to the owners of residential propoerty
        
        named peril policies
        
        insures against losses listed
        
        open peril policies
        
        insures against any losses except for those listed
    - - protects against fin losses due to a claim of negligence (D&O)
  - - - allocates a portion of the risk to another company in exchange for a portion of the premium
  - - - protection in the event of extreme insurance losses, following natural catastrophes or pandemic disease outbreak
    - - prior to the maturity
        
        if a pre defined peril occurs, part of or all of the capital is immediately transferred to the insurance buyer under the bond, the insurance buyer then uses the capital to pay its claims to ploicyholders
        
        if no major natural catastrophes occurred, the cat bonds are redeemed at 100% on maturity
- - - - process by which insurers select risks to insure and decide how much in premiums to charge for accepting those risks
      - measured in combined ratio (ratio of losses and expenses to premiums), is under 100%, the underwriting is profitable
    - - invest premiums they collect from insured parties
      - "float" is the amount of money at hand an insurer has collected in premiums but not yet paid out in claims
  - - - an underwriter reviews each policy prior to its acceptance to determine if the risk is acceptable
    - - The claims adjuster undertakes a thorough investigation pf each claim, and determines if coverage is available under the terms, if so, the reasonable monetary value of claim and authorises payment
    - - independent agents may sell insurance products of a number of different insurance companies, while exclusive agents only sell products of one
      - nowadays, most insurance companies use multiple distribution channels including banks, professional org, and market places
- - - - replace OCI and take over regulation of insurance intermediaries from the 3 self regulatory org through a statutory licensing regime
    - - ON THE RISE
    - - set up of insurance authority independant of govt
      - abolish self regulatory system for intermediaries to strengthen conduct
      - est Policyholder's protection fund as another saftey net
      - new requirements on underwrtiign unit linked policies
      - intorduce new intermediaries renumeration disclosure system
      - enacted new anti money laundering legislation, resolution regime currently underway
      - issue consultation paper on a risk based capital framework for HK
    - - china currently leads Asia's insurer's asset growth
    - - Growth of insurance in Asia
      - Rise of FInTech
        
        Automaton
        
        digitalsation
        
        increased competiton from China
      - IFRS 17 and other acct changes
      - Solvency II and regulatory changes