Insurance Risk

For effective insurance business it is crucial to get deep into performance and profitability details in order to monitor business trends, optimise products pricing, and identify profitable or non-profitable segments. In other words, for insurance business it is critical to ensure the efficient management of insurance risk.

 

Insurance risk is the main risk for insurance companies under the quantitative impact studies in Solvency II project (accounts more than 90% solvency capital requirements). This risk arises directly from the insurance contracts.

 

Finance Engineering Insurance Risk relays on Solvency II insurance risks definition, is based on UK risk management standard, which is developed by major risk management organizations in UK – Institute of Risk Management (IRM), Association of Insurance and Risk Managers (AIRMIC) and National Forum for Risk Management in the Public Sector (ALARM).

 

Finance Engineering Insurance Risk combines following management and technological concepts:

  • RBP (Risk Based Pricing)
  • DWH (Data Warehousing)
  • Ad-hoc reporting (enables non IT users to create reports by themselves operating with predefined list of indicators and slices)

 

Key benefits of Insurance Risk system:

  • Improvement of product profitability
  • Aligned and controlled combination of two targets: profitability and written premium 
  • Better structure of the insurance contract portfolio (ensured opportunities to decrease loss ratio and efficiently spread risks)
  • Flexible features to avoid anti-selection and gain competitive advantages
  • Measured decisions on pricing using price elasticity analysis 
  • More accurate estimation of claim reserves
  • Measured arguments for negotiations with reinsurers
  • Core background for implementation of Solvency II
  • Risk-underwriters, actuaries work according predefined process, which has clear measurement of results and efficient control functions

 

Investigate more about risk management process and ways how Insurance Risk system supports it.
Investigate more why it is extremely important to invest in elimination of risks anti-selection.
See examples how efficiently distributed risk may help to decrease claim ratio.
See premium elasticity analysis sample result.

 

Finance Engineering Insurance Risk system offers the following modules: