The person within the insurer charged with screening new applications. This person is the one to approve or decline the application. He or she may alternately recommend a different policy or premiums to the applicant.
Tag: RAW
Risk assessment
1. Collective reference to: risk identification, risk analysis and risk evaluation, i.e. an overall process in risk management. 2. Legal requirement under health and safety regulations. See MANAGEMENT OF HEALTH AND SAFETY AT WORK REGULATIONS 1999; COSHH.
Risk assumption
An informed decision to accept the likelihood and consequences of a particular risk. This is planned risk assumption. A supermarket chain may choose to carry the risk of loss or damage to plate glass windows given that it has a spread of risk and the maximum possible loss is small relative to their resources. Deductibles and self-insurance are forms of risk assumption.
Risk Attaching Basis
A basis under which reinsurance is provided for claims arising from policies commencing during to the period to which the reinsurance relates.
Risk aversion/risk averter
An attitude of an individual or organisation with a preference for avoiding risk whenever possible. A risk averter prefers a definite premium, even though it may exceed the loss expectancy, to unknown losses. If the loss expectancy’s monetary amount is £50, a risk averter will pay, say, £75 when the loss possibility range is £0-£5,000.
Risk avoidance
An informed decision not to become involved with, or continue with, a risk situation. The potential loss is regarded as greater than the potential value of the risk-creating activity, e.g. using PCBs in manufacturing processes, building on flood plains.
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Any measure which reduces to zero the probability of a loss from a given exposure may be property classified as risk avoidance. Risk avoidance may be achieved by either abandoning or never undertaking an asset or activity which involves the loss exposure being avoided. (By some authorities, risk avoidance is also called ‘risk elimination’ because risk avoidance eliminates entirely a given exposure to loss.)
Risk Based Capital
REINSURANCE: The amount of capital needed to absorb the various risks of operating an insurance business. For example, a higher risk business requires more capital than one with lower risks. The calculation is intended to be unique to each insurer.
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The assessment of the capital requirement for a general insurer by considering the risk profile of the business written and its operations. The required minimum margins of solvency are determined after considering IRDA requirements in India.
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The determination of a member’s capital requirement according to the spread of syndicates in which he participates and the nature of business that those syndicates underwrite.
Risk Based Capital (RBC)
A method utilized by insurance regulatory authorities to determine the minimum amount of capital required of an insurer to support its operations and write coverage. The insurer’s risk profile (i.e., the amount and classes of business it writes) is used to determine its risk based capital requirement.
Risk benefits
Pensions term describing benefits that are not pre-funded and that are often insured on an annual basis, which usually means death or disability benefits.
Risk bundling
Risk financing approach that allows a company to benefit from its own diversification across the different classes of risk, and over time through the use of captives or multiline, multi-year programmes.