Underwriting Risks: Life Risk and Non-life Risk
Introduction
Risk Management
Financial Economics of Insurance
Underwriting Risks: Life Risk and Non-life Risk
Investment Risks: Market, Credit and Liquidity Risk
Non-financial Risks: Operational and Business Risk
The Financial Crisis: Consequences for Insurers
Insurance Supervision: From Solvency I to Solvency II
Insurance Supervision Outside the EU
Pillar I of Solvency II
Pillar II of Solvency II
Pillar III of Solvency II
Accounting Regulations
Banking Supervision: From Basel I to III
Management Control
Organising Risk Management
Bringing All the Strands Together
This chapter describes the underwriting risks. For a long time, the life and non-life industries were two relatively separate worlds, as their day-to-day practice differs and each has its own historical roots and legal backgrounds. Therefore, they will be described separately in this chapter. However, it will be shown that the control and calculation of economic capital for the life and non-life industry are closely related.
LIFE INSURANCE PRODUCTS
Life insurance is insurance that is coupled to the death or simple longevity of a person. It is an agreement to pay out a certain sum of money or value at a certain moment in the future. There is great diversity in life products and it would be beyond the scope of this book to run through all forms, so what follows is a short review.
Traditional life insurance products include endowment assurance, term assurance, life annuities and other hybrids. Pure endowment assurances pay out an amount when the person is still alive at a previously agreed moment, while term assurance provides a payment when a person dies before an agreed moment. Annuities pay out a series of amounts during a certain time period – for instance, until death
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