INSU07045 2022 Practice of Risk Control and Underwriting 2 (Practice)

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

Apply underwriting policy and practice in the workplace, demonstrating how you would apply these policies 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.

Demonstrate how an insurer controls their potential risk exposure and the role of reinsurance therein.

Act effectively under guidance in a peer relationship with qualified practitioners; learn to act in variable unfamiliar learning contexts managing tasks independently, professionally and ethically.

This module will be delivered through self-directed learning with the support of a supervisor and mentor in the student's workplace. This module complements "The Practice of Risk Control & Underwriting 1" module and allows the student to integrate their academic knowledge gained into a practical work-based setting in the completion of a number of case studies and on-the-job tasks. The student will have ample choice to enable them to pick an agreed number of case studies and tasks from the work-based syllabus. The student should focus on case studies that are appropriate to their working environment. The student is required to locate from within their organisation cases that meet the described characteristics of an appropriate study scenario for use as part of the work based syllabus. The completed case studies will be submitted through the learning management system having been signed off by their supervisor. The completed case studies will be reviewed by IT Sligo's academic programme leader.

There are specific requirements which must be met by the student in completing the experience-based syllabus. The work-based supervisor is required to validate that the case studies and tasks meet the attainment of the learning outcomes of the module. Specific criteria are provided for each of the case study areas. The student must answer the relevant questions posed in the prescribed format. The work-based supervisor will assess the case study/task on a pass / fail basis and the completed case studies (with the supervisor's report) are uploaded to the learner management system by the student. The case studies will not be considered/accepted as complete if they are not submitted with the supervisor's signature/report. 

This module will be assessed 100% by continuous assessment.

This module has been designed to complement ‘The Practice of Risk Control &  Underwriting 1’ module. The student will relate the topics covered in that module to their workplace environment and will work on these learnings in a business context. 

This assessment examines the student's understanding and application of knowledge. These questions will require students to link pieces of information together in a cause-and-effect relationship and apply their knowledge and/or understanding to a given set of circumstances.

The answers will involve an essay-type response.

If the work-based supervisor fails to sign-off on the student's submission, the student has a maximum of 3 opportunities to submit their work.

A submission will not be accepted or considered complete if the work-based supervisor has not signed off on the work.

LO1 FROM 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.