RMIN 5570
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Complete list of Terms and Definitions for RMIN 5570

Terms Definitions
Experience rating RM:   - go with avg except adjust for individual losses history
y for claim to be valid does loss have to occur during policy period?
states are rates regualted by state or fed govt
multi-trigger products (MTPs) two triggers for claims to be paid: 1.an insurance event (hurricane) 2.a non-insurance event (decline in financial or bond mkt)
expected loss ratio  1- (expense ratio + profit)
Class rating (manual rating) ratemaking:   form classes (groups of similar exposures) then come up with expected losses
agents claims: who has authority from ins company to settle small claims
insurable interest claims: must show ______ _______ at time of purchase to recieve any benefit
Loss Portfolio transfer(LPT) policyholder transfers outstanding claims reserves to the insurer
state made rates strictest type of rate regulation?
1. legal requirements (5 yrs for fire) 2.variability of losses over time 3.credibility of resulting ratemaking data RM in diff types of ins 3 factors in determining appropriate exp period
investment income   §Premiums ß by amount of ______ ________earned on premiums
credibility level of confidence that available data accurately reflect expected losses
most types of liability ins   RM in diff types of ins type of insurance where loss develpment factors play a key role due to long delay in pmy of claims and use AYM of data collection
actuaries who estimates IBNR?
schedule experience retrospective RM: 3 types of merit rating
loss development factor RM data development immature data are multiplied by a ______ _____ ______ to produce sound estimate of data that will result when loss has fully matured
1-3 RM in diff types of ins an exp period of __-__ yrs is common for auto and other types of liab ins
Retrospective rating- RM:    create a risk pool to insure our own cars, at end of the year calculate total losses and then divide up costs among group
finite risk insurance based on spreading of individual risks over time
financial reinsurance type of reinsurance that focuses more on capital mgmt than risk transfer
mandatory bureau memebership rate regulation in which rates are decided by a group and MUST be used throughout the industry
rate relatives   Can be determined by comparing the estimated loss ratio for each territory to the statewide average
true claims: t/f most suits against ins company occur because ppol believe the comapny is dragging their feet?
use and file type of rate reg allowing company to begin selling ins products then file rates within a month
CA, NJ, MA, SC, PENN ratemaking: 5 states w/ least freedom to manage personal lines
profit sharing when favorable loss exp occur or investments generate income what sort of compensation do primary insurers receive for the higher than usual premiums associated w/ finite insurance?
claims department what department: - assists the customer in determining what claim they have -educates cust on policy details -notifies UW dept of mispriced policies -ensures lasting r-ship w/ cust
competitive, profitable corporate objective of ratemaking is to be _____ and______.
financial reinsurance designed to smooth incomes by using the current years profits to pay for next years possible losses
adequate, not excessive, not unfairly discriminatory regulatory objectives of ratemaking are to make rates _________, ___  ______, and ___ _____ _________
fire, inland marine, and auto physical damage RM in diff types of ins types of insurance where loss develpment factors arent as improtant and the CYM of data collection are used
illinois, idaho, indiana, utah , iowa rate regualtion: 5 states w/ most freedom to manage personal lines
policy year data collection method method where earned premiums, exposure units, and incurred losses are analyzed for a specific group during a 12 mo period
financial reinsurance also known as finite reinsurance
retrospective excess of loss covers (RXL's) -offer broader spectrum of cover than LPT's -often includes IBNR losses -no transfer of outstanding claims reserves
reduces the relationship between reins premiums and the reins limit reduces/increases the reinsurers potential UW loss?
allows for smooth flow of business transactions what does allowing propty ins to be purchased on any propty do?
prospective loss costs expense provision profit and contingencies factor rm name 3 components of an insurance rate?
calendar year data collection method RM method that uses standard accounting data
gross premium rm pure premium + loading=
-pure premium method -loss ratio method -judgement method name 3 ratemaking methods?
timing risk possibility losses will be paid more quickly than expected?
profit loading in ratemaking formula rm how do ins companies ensure stockholders receive a profit/reward for investing
higher Are financial reins premiums are higher/lower than traditional reins premiums?
prior approval rate regulation where a commissioner must approve rates before they can be used
financial reinsurance a nontraditional reinsuracne agreement for a limited amt of risk
linear trend rm: fixed amt of change each year
premium trend rm: adjusts for changes in exposure or rate base
pure premium rm PV of exp losses
blended cover mixture of ins, reins, and other RM techniques on a single policy?
financial reinsurance -covers multi year period premium held and invested by reinsurer -returned to ceding company minus pre-dtermined profit margin
territorial relativities RM data development ________ _______ can be determined by comparing est incurred loss ratio for each territory  to the statewide avg loss ratio.
ISO-Insurance Services Office AAIS-American Association of Ins Services NCCI-National Council on Compensation Ins 3 major advisory orgs?
1.end of period 2.ceding company suffers a loss -premium returned to ceding company when one of two things occurs
prop 51 ratemaking: what bill moved CA from most freedom to least in 1986
UP, down when int rates go ____, premiums go _____?
yes, insurable int at time of purchase if husband takes life ins policy out on wife while, then 3 mos later they divorce and she dies 2 yrs later, and husband still makes prem pmts, can he receive benefits
no they are included in the UPR are losses that have not yet occurred yet included in the loss reserves?
claims adjusters who estimates reported unpaid losses?
loading rm costs of running ins company?
rate relatives diff in rates btwn various classes or territories
judgement method setting reserves: -sit down and write a number down -can be by committtee -base # on previous experience
finite risk type of reinsurance characterized by assumption of limited risk by insurer? -multi year contract?
public adjustor claim: this type of adjustor works on contingent fee, usually around ____% - only useful when significant disagreement exists
yes does a finite reinsurer share profits w/ primary insurer when it has a favorable loss experience or generates income through invetments?
cost what are ins rates functions of?
4.0 claims: highest satisfaction rating possible
trending method of adjusting past data to reflect changes in frequency and severity
trending RM data development the purpose of _____ is to adjust the developed losses from the experience period to refelct conditions expected in future.
claims dept claims: besides producer the ______ ________ is most visible to the public
expected loss ratio 1- (expense ratio + profit)
proof of loss form stating that all info provided to insurer is correct and acceptable claim is offered
actual loss ratio  incurred losses/ earned premiums
MTP's offers protection from disaster scenarios and price falls in equity or bond mkts in same financial year?
multi-line/multi-year products (MMP's) -combine diff catagories of risk in one product?
tabular method setting reserves: group claims based on diff values (such as age)
exponential trend rm: fixed % change each year
public adjustor claims: this person is used when insured disagrees w/ amount given to them for loss by insurance company
yes, cant make any claims unless you own it though can you purchase propty ins on any piece of propty you like regardless of ownership
investment risk reins: possibility an investment portfolio will yield a lower return than expected
avg value method setting reserves: -we know on avg what we will pay per claim - consider how many reported claims we currently have and multiply by avg amt paid per claim
judgement rating ratemaking  asking someone in the industry to just sort of come up with a number?
notify insurer of loss first step in claims process?
true T/F? Financial reins is intended for high severity losses?
-premium is returned no risk transfer takes place financial reinsurance differs from traditional reinsurance because:?
ultimate loss claimspaid loss+case reserve+IBNR=
rate RM price per exposure unit?
independent adjustor claims: person used in area w/o large enough mkt to sustain full time ________ -in the aftermath of a hurricane to handle increased demand
multi-line/multi-year products (MMPs) -bundling of diff catagories of risk in one product -allow substantial risk to be transferred
expense provision what portion of insurance rate accounts for the costs of expenses, taxes, licensing fees, etc
Blended cover goal of this type of re is to incorporate adv of finite risk ins( mgmt of CF, smoothing income and profit sharing) w/ adv of transferring the risk through trad ins?
long-term protection, continual flow With a finite risk agreement the primary insurer get ______-______ _______ and the reinsurer gets a _______ ____ of premiums.