So last week we talked about moral hazard. This week’s topic is closely related, and is also very relevant to the insurance industry [保險界] (although probably useful in everyday life …
Blog 27: The Cobra Effect by Xavier Lo, FIA, FRM, MBA
Recently I spoke to a friend who told me her sales department [銷售部門] employees do not get paid any commission [佣金]. This is very uncommon and the apparent reason was …
Importance of Granularity in General Insurance
The first question occur to mind what is granualarity and how is it that important for a General Insurance business? Breaking down Granularity Granularity is subdivision. If the business is …
Industry Loss Warranties – ILWs
This is a short summary explaining Industry Loss Warranties (ILWs). ILW is explained in detailed in Actuarial SP7 subject (formerly ST7). Definition of ILW Industry loss warranties (ILWs) are a type of reinsurance contract where the basis of cover is not indemnity, i.e. repayment of actual losses suffered. Protection is based on the total loss arising from an event to the entire insurance industry rather than individual insured company’s own losses. Trigger Event for ILWs The original size of the industry loss is used as a trigger for eligibility to a recovery. …
Latent claims: Claims which insurer not get to decide
What are Latent Claims? Latent Claims derive from the perils that were unforseen when the Insurer wrote the policy and is applied to claims that become known about some years …
Ultimate Net Loss
What is Ultimate Net Loss For Insurer, the loss is when a claim is received. However, that is not the only aspect to consider while calculation of loss reserves or …
Average Severity
Severity refers to the amount you have received Insurance claim for. Average Severity would be the loss associated with an average Insurance claim. Average Severity Calculation To calculate Average Severity, …
Frequency Severity
What is Frequency Severity Method Frequency severity method is an actuarial method for determining the expected number of claims that an insurer will receive during a given time period and how …
Loss development factors (LDF)
Loss development factors or LDFs are used in insurance pricing and reserving to adjust claims to their projected ultimate level i.e to Ultimate Claims. Insurance claims, especially in long-tailed lines such as liability insurance …