UNDERWRITING RISKS
1. Underwriting process risk - financial loss related to selection and approval of risk to be insured
2. Pricing risk - financial loss due to insufficient premium charged for a riskundertaken.
3. Product design risk - exposure to events not anticipated in the design and pricing of the life insurance contracts
4. Claims risk - more than expected number of claims arising.
5. Economic environment risk - adverse affect on the company due to change in socio-economic conditions.
6. Net retention risk - losses due to catastrophic or concentrated claims experience arising due to higher retention of risk within the company.
7. Policyholder behaviour risk - unanticipated behaviours of the policyholders adversely affecting the company.
8. Reserving risk - inadequate provision in company accounts for policy liabilities.
CREDIT RISKS
1. Business credit risk - failure of a re-insurer
2. Invested asset credit risk - non-performance of invested assets
3. Political risk - Political situations affecting credit worthiness of securities held by the insurer
4. Sovereign risk - Political situations affecting credit worthiness of securities issued by government or government entities
TABLE OF RISK IDENTIFIED
Note:
1. India - the risk classification system is used as a starting point to develop a classification system that is suitable for life insurance companies.
2. IAIS - The risks are classified according to their impact on the solvency of an insurer.
PART 2
1. We would look at types of market risks, operational risks and liquidity risks.
2. Also look at the methods to analyse risks and quantify financial impacts.
