1 part 2 chapter 4: risk management principles and their application in life insurance chapter 5:...
TRANSCRIPT
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Part 2
• Chapter 4: Risk Management Principles and their application in Life Insurance
• Chapter 5: Underwriting
• Chapter 6: Reinsurance And Claims
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Chapter 4
Risk Management Principles and their application in Life
Insurance
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Common risks faced by organizations
• Operational Risk
• Financial Risk
• Liability Risk
• Property Hazards Risk
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Risk Classification in Insurance Companies
• Underwriting Risk• Market Risk• Credit Risk• Liquidity Risk• Operational Risk
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Managing Underwriting Risk
Complete relevant information about the client is essential
• Medical Information• Nonmedical Information including
financial Information
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Factors that Increase Risk of Death (Mortality)
• Medical Factors– Overweight– Tobacco smoking or chewing– Excessive alcohol drinking
– Adverse family history – Adverse medical history
• Nonmedical Factors– Advancing age– Risky occupation– Hazardous hobbies– Risky residential environment– Abject financial status
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Tools to gather information
• Application Form• Financial Documents• Agent’s Report • Medical Report/Medical Test Reports• Verification Report
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Chapter 5
Underwriting
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Nonmedical Underwriting
• Underwriting of applications without medical examinations
• Usually for clients of younger ages and low sum assured
• Nonmedical factors assessed for underwriting include age, occupation, previous insurance, family health history etc.
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Medical Underwriting
• Applicants with higher sum assured go for a medical test at the time of application
• Medical tests may include Medical examination, Blood chemistry, HIV test, ECG/treadmill test etc.
• These reports are assessed along with the nonmedical factors present in the application form
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Common conditions that increase risk
• Overweight• Diabetes• High blood pressure• Smoking
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Some health conditions that can lead to rejection of application
• Uncontrolled diabetes• Very high blood pressure• Tumors• Kidney disease• HIV
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Financial UnderwritingQuestions asked for underwriting the financial risk • Appropriateness- Is the application based on a
valid insurable interest?
• Consistency-Are the type of policy applied for and, in particular, the sum to be insured reasonable?
• Affordability-Are sufficient resources available with the applicant to enable payment of future premiums?
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Chapter 6
Reinsurance and Claims
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Need for Reinsurance
• Helps insurance companies manage large losses
• Helps expansion by decreasing requirement for maintaining mandatory reserves
• Helps in underwriting of complex and rare cases
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Types of Reinsurance
• Proportional
• Non-proportional
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Types of Reinsurance
Proportional Non-proportional
Yearly Renewable
TermCoinsurance Stop Loss
Spread Loss
Catastrophe
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Reinsurance Agreements
• Facultative
• Automatic
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Types of Claims
1. Death Claims – With Or Without Riders– Term Rider– Accidental Death Benefit Rider
2. Survival Claims– Critical Illness– Disability Claims– Waiver Of Premium Rider
3. Maturity Claims– Intermediate Benefit– Money Back Plans
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Claims Process
• Intimation• Registration• Investigation• Processing• Decision• Communication