You are the Head of Underwriting for an insurer. You are conducting a review of four...

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You are the Head of Underwriting for an insurer. You are conducting a review of four of the insurer's existing insurance portfolios (labelled A, B, C and D) and two prospective insurance portfolios (labelled X and Y). The prospective insurance portfolios are areas of business not currently underwritten by the insurer. The six insurance portfolios have the following characteristics: A is a pet insurance account, which has been underwritten by the insurer for the past three years. B is an employers' liability account, which has been subject to a significant number of industrial disease claims. . . . C is a property account that has a small number of fire claims. Each claim is significant in cost. • D is a long-established, commercial combined account, but in a declining overall market. X is a cyber liability account. . Y is a motor account for classic cars. . For your review, the following information has been compiled: Table 1 - Existing insurance portfolios (most recent annual figures) Insurance portfolio Claims paid £m A B C D Y Gross written premium £m (a) (b) (c) 20 30 25 40 5 4 6 120 Claims outstanding £m 1 15 18 20 12 5 Table 2 - Prospective insurance portfolios (most recently reported annual figures) Insurance portfolio Gross written premium £m Anticipated claims £m 27 28 Expenses £m 4 4 2 2 8 6 Anticipated expenses £m (12) Discuss the four existing insurance portfolios to decide which one presents the greatest risk to the insurer's long-term profitability. Include in your answer all your workings and assumptions. Discuss the two prospective insurance portfolios, to decide which, if any, the insurer should underwrite. Include in your answer all your workings and assumptions. (10) (8) Identify, with justification, four challenges for the insurer when comparing the six insurance portfolios shown in Table 1 and Table 2 above. You are the Head of Underwriting for an insurer. You are conducting a review of four of the insurer's existing insurance portfolios (labelled A, B, C and D) and two prospective insurance portfolios (labelled X and Y). The prospective insurance portfolios are areas of business not currently underwritten by the insurer. The six insurance portfolios have the following characteristics: A is a pet insurance account, which has been underwritten by the insurer for the past three years. B is an employers' liability account, which has been subject to a significant number of industrial disease claims. . . . C is a property account that has a small number of fire claims. Each claim is significant in cost. • D is a long-established, commercial combined account, but in a declining overall market. X is a cyber liability account. . Y is a motor account for classic cars. . For your review, the following information has been compiled: Table 1 - Existing insurance portfolios (most recent annual figures) Insurance portfolio Claims paid £m A B C D Y Gross written premium £m (a) (b) (c) 20 30 25 40 5 4 6 120 Claims outstanding £m 1 15 18 20 12 5 Table 2 - Prospective insurance portfolios (most recently reported annual figures) Insurance portfolio Gross written premium £m Anticipated claims £m 27 28 Expenses £m 4 4 2 2 8 6 Anticipated expenses £m (12) Discuss the four existing insurance portfolios to decide which one presents the greatest risk to the insurer's long-term profitability. Include in your answer all your workings and assumptions. Discuss the two prospective insurance portfolios, to decide which, if any, the insurer should underwrite. Include in your answer all your workings and assumptions. (10) (8) Identify, with justification, four challenges for the insurer when comparing the six insurance portfolios shown in Table 1 and Table 2 above.

Answer rating: 100% (QA)

a Existing Insurance Portfolios Review 1 Portfolio A Pet Insurance Loss Ratio Claims Paid Gross Written Premium 520 25 Combined Ratio Loss Ratio Expen... View the full answer