Managing Insurance Risks in Insurance Industry

Claims and underwriting processes are subject to regular review from internal and external audit and from reinsurers. Exposures to insurance are managed through Reinsurance, reducing claims volatility and providing access to global expertize in specialist areas. From Pricing perspective the Product actuary prepares the cash flows based on various assumptions, conducts profit testing, sensitivity analysis and determine the premium rates. All product developments consider risk management and mitigation strategies ensuring that the risks accepted, and reward in terms of value creation, consistent with the Risk Management Policy.

Managing Insurer’s Operational Risks

The Functional heads perform on going risk profiling that seek to ensure that operational risks are identified, assessed, recorded and managed and that controls implemented are effective and consistent with the Board’s risk appetite. Key risks are monitored regularly. Risk Management Versus Science : Science advances knowledge, and presumably anything that advances knowledge tends to reduce subjective risk. Yet as science advances, new doors to new unknown are opened, thus creating a new chain of uncertainties. However, the net effect of scientific advances is very likely to reduce subjective risk feeling by increasing one’s confidence the eventual solution of future problems. The potential effects of science on the Insurance industry are profound

Mandated benefits

1. Medical services required by state or federal statutes but not necessarily covered as an insurance benefit (e.g., medical services for child abuse or rape or mandated 48-hour maternity stays following delivery of a baby). Also referred to as mandated services . 2. Minimum insurance benefits specified under federal or state regulations (e.g., specific smallest amount of benefits that must be paid for alcoholism under all insurance contracts sold in the state). Also called state legislated benefits .

Mandated providers

1. Health care professionals who must be state or federal licensed providers to render services under a managed care plan (e.g., chiropractors, optometrists, podiatrists, psychologists). 2. Health care suppliers whose medical services must be included in insurance coverage offered by a health plan as required by state or federal regulations.