Question List # 8
1. Describe reinsurance functions
Reinsurance has 6 principal functions:
1) Increase large line capacity- reinsurance allows a primary insurer to assume more
significant risks that its financial condition and regula
Question List # 1
1. Describe the major goals of an insurer.
The 5 major goals are:
1) Earn a profit-insurers need to make a profit to keep the company going. If it is
proprietary insurer they need to make a profit to pay their stockholders (their
Question List # 4
1. Why risk control?
Risk controls main purpose is to assess loss exposures to help with the underwriting
function. The risk control function has 4 purposes: earn a profit, meet customer needs,
comply with legal req
Question List # 2
1. Why insurance regulation?
1) To protect consumers- insurance agreements arent easy to understand for the general
public, so many consumers wont be able to tell if the policy that they are purchasing are
Question List # 3
1. Why underwriting?
Underwriting is very important to the insurance industry because it: protects insurers against
adverse selection, ensures that the insurer maintains enough policyholders surplus, and lets
Question List # 6
1. Why adjusting?
Adjusting is used in both the claims, and the actuarial departments. Claims adjustments is
to ensure that the insureds claim is paid properly, not excessive and not unfair. Actuaries
Question List # 7
1. Describe the actuarial function.
The actuarial function serves to put a price tag on risk for the insurance company. One
major part of this is ratemaking operations. Ratemaking involves estimating trends and
Question List # 5
1. Why claim?
The claim function serves two main purposes, to comply with the agreed upon contract,
and to support the insurers financial goals.
The insurer complies with the contract by agreeing to pay, defend, or