INSU07044 2022 Practice of Risk Control and Underwriting 1 (Theory)

Describe and evaluate the factors impacting on an insurer’s corporate and underwriting strategy.

Critically discuss underwriting policy and practice and demonstrate how you would apply these to the main classes of insurance business.

Display detailed knowledge of the environment in which underwriting takes place in the Irish insurance market.

Demonstrate a critical awareness of the principles and practices of risk pricing.

Explain in detail how an insurer controls their potential risk exposure and the role of reinsurance therein.

This module is delivered with a blend of self-directed study supplemented by e-learning resources such as online lectures and webinars The teaching and learning modes will include:

Textbook

Dedicated Textbooks for each module in hard copy and downloadable format updated annually to reflect changes in legislation and regulation.  Summaries of each chapter will be provided highlighting key topic areas.

How-To Guides

A range of ‘how to’ guides including a glossary of terminology in Insurance and exam support

Synchronous and Asynchronous Lectures

Online lectures utilise lecture notes with extra reading material. Links from tutorials to textbooks for easy access and review In these sessions.

In-class discussion

The in-class discussion will be used to encourage conversation and debate and to support students to build their networks and apply their learning in their workplace.

Quitch - Gamification App
A gamification app to allow students to test their knowledge on each chapter of the textbook. 

Online Resources

Infographics, videos, and podcasts, Mock Exams and Questions

This module will be assessed with a mid semester online MCQ exam contributing 10% of the final grade and a final written examination contributing 90% of final grade.  

Learners will repeat each failed element of their assessment.  The repeat assessment elements will be an online MCQ exam contributing 10% of the final grade and a final written examination contributing 90% of final grade. 

LO1 ROM CORPORATE STRATEGY TO UNDERWRITING STRATEGY

• Differentiate between corporate and underwriting strategy and identify the various types of underwriting strategy.
• Recognise the importance of capital for insurers and explain the different ways this capital can be employed.
• Describe the balance between the drive to achieve growth and profit in the context of the underwriting cycle, and how the different stages of the insurance market cycle impact on an insurer’s underwriting strategy.
• Outline the different distribution channels for insurance products and how they may impact on underwriting performance.
• Explain the operation of delegated authority and the potential problems associated with this.
• Explain the consequences of insurance fraud, how it is perpetrated, and the measures used to combat it.

LO2 UNDERWRITING - POLICY AND PRACTICE

• Define the practice of underwriting and identify the role of the underwriter.
• Outline how insurers classify and categorise risks into comparable groups.
• Explain the importance of physical and moral hazard in setting underwriting policy.
• Explain how insurers establish underwriting and risk improvement criteria and outline the role of the risk surveyor in risk control and underwriting.
• Demonstrate how policy cover is established and how insurers use policy wordings as a form of risk control.
• Describe the relationship between the underwriting and claims functions.

LO2 UNDERWRITING AND RISK CONTROL: PROPERTY AND BUSINESS INTERRUPTION INSURANCES

• State the main characteristics of property and business insurance and demonstrate how insurers use risk acceptance criteria as a means of managing their risk exposure.
• Demonstrate the main considerations for risk assessment and the underwriting options and basis of rating for the main types of property and business interruption insurances.

LO2 UNDERWRITING AND RISK CONTROL: MOTOR AND LIABILITY INSURANCES

• State the main characteristics of motor and liability insurances and explain how insurers use risk acceptance criteria as a means of managing their risk exposure.
• Demonstrate the main considerations for risk assessment and the underwriting options and basis of rating for the main types of motor and liability insurances.

LO3 UNDERWRITING IN IRELAND

• Outline the term ‘underwriting’.
• Outline the unique characteristics of the Irish non-life insurance market and recognise market trends.
• Demonstrate the effect of the Central Bank’s regulatory requirements and relevant legal requirements on underwriting.
• Explain the operation of the underwriting cycle and the key influencing factors.

LO4 PRICING THE RISK 

• State the main elements of the pricing process and explain the role of the actuary in risk pricing.
• Demonstrate the main factors considered by insurers when calculating premiums for a business portfolio.
• Explain the role of claims data and demonstrate how it is interpreted by underwriters when setting prices.
• Demonstrate how underwriters determine the premiums for individual risks, including the burning cost method of premium calculation, and describe the process of prospective risk analysis.
• Discuss recent developments in risk pricing.
• Outline the role of competitor data and how it is interpreted by underwriters when setting prices.

LO5 RISK EXPOSURE AND CONTROL

• Explain how exposure to single risks and single events can be measured and managed to balance the account, and explain the aggregation of risks and the use of catastrophe modelling.
• Explain the role of reinsurance in controlling exposure, and outline the benefits of reinsurance.
• Explain insurers’ considerations when deciding their retention level and choosing a reinsurer.
• Describe the two main types of reinsurance and discuss their advantages and disadvantages.
• Demonstrate the difference between proportional and non-proportional reinsurance and outline the reinsurance considerations associated with specific classes of insurance.
• Outline methods, other than reinsurance, that can be used for limiting exposure. 

Recognise the role of retrocession in the reinsurance market.