The document discusses UK financial services regulation. It explains that regulatory authorities aim to maintain confidence in the financial system and ensure stability, consumer protection, and reduction of financial crime. The document outlines changes over time, including the introduction of statutory regulation by the Financial Services Authority (FSA) in 2005 and the subsequent splitting of FSA responsibilities in 2012 to different regulatory bodies. It also discusses the FSA's risk-based and principles-based approaches to regulation. The principles aim to ensure integrity, skill, care, customer interests and fair treatment in the conduct of financial businesses like underwriting.
The document discusses the underwriting cycle in the insurance industry. It explains that underwriting involves deciding which policies to accept or reject based on profitability. The cycle toggles between hard and soft markets. In hard markets, rates and availability of coverage are reduced due to factors like catastrophes. Soft markets have lower prices and looser underwriting standards due to increased competition. The profitability of policies and competition between insurers are major factors that drive the cyclical nature of the underwriting process.
Corporate strategy influences underwriting strategy. Underwriting strategy is derived from and aims to implement corporate objectives through business plans and targets. Different types of underwriting strategies exist based on classes of business, products, and organizational structure. The underwriting cycle, market conditions, major events and trends all impact underwriting strategy and must be considered to develop a strategy that achieves corporate goals.
This document discusses underwriting policy and practice, including physical and moral hazards, risk classification and categorization, underwriting criteria, policy terms and conditions, and risk exposure control. Key points:
1. Physical hazards relate to direct aspects of a risk that impact insurability, like construction, location, safety devices. Moral hazards relate to the conduct and attitude of the insured before, during and after a loss occurs.
2. Risks are classified by type of coverage and individual risk characteristics to facilitate underwriting. Similar risks are grouped into categories.
3. Underwriting criteria define risk acceptance based on hazard level. Criteria may restrict certain trades, locations, or impose requirements for approval.
The document discusses the process of insurance underwriting. Underwriting involves evaluating risks to determine whether to issue an insurance policy to an applicant. It aims to select applicants that will likely have claims below assumed losses to ensure a profit. The underwriter considers the applicant's exposure, pricing alternatives like modifying coverage, and monitors policies to maintain satisfactory results for the insurance company. Underwriting balances risks across policyholders and ensures adequate premiums are charged for expected losses.
A comprehensive presentation on the financial risks involved in businesses in general & specifically in banks.
What is Risk?
Generally - Danger, Hazard, Adverse impact, Fear of loss.
Financially-Loss of earnings/capital
May result in incapability of financial institution to meet business goals
Basically there are 4 main risks:
1. Credit Risk
2. Market Risk
3. Liquidity Risk
4. Operational Risk
Financial risk management involves identifying risks facing a business, determining an appropriate risk tolerance, and implementing strategies to manage risks. There are three main sources of financial risk: changes in market prices, actions of other organizations, and internal failures. The risk management process assesses financial risks and develops consistent strategies using tools like hedging, diversification, and derivatives. Key factors that impact financial rates and prices include expected inflation, economic conditions, monetary policy, foreign demand, and political stability.
The document discusses the underwriting cycle in the insurance industry. It explains that underwriting involves deciding which policies to accept or reject based on profitability. The cycle toggles between hard and soft markets. In hard markets, rates and availability of coverage are reduced due to factors like catastrophes. Soft markets have lower prices and looser underwriting standards due to increased competition. The profitability of policies and competition between insurers are major factors that drive the cyclical nature of the underwriting process.
Corporate strategy influences underwriting strategy. Underwriting strategy is derived from and aims to implement corporate objectives through business plans and targets. Different types of underwriting strategies exist based on classes of business, products, and organizational structure. The underwriting cycle, market conditions, major events and trends all impact underwriting strategy and must be considered to develop a strategy that achieves corporate goals.
This document discusses underwriting policy and practice, including physical and moral hazards, risk classification and categorization, underwriting criteria, policy terms and conditions, and risk exposure control. Key points:
1. Physical hazards relate to direct aspects of a risk that impact insurability, like construction, location, safety devices. Moral hazards relate to the conduct and attitude of the insured before, during and after a loss occurs.
2. Risks are classified by type of coverage and individual risk characteristics to facilitate underwriting. Similar risks are grouped into categories.
3. Underwriting criteria define risk acceptance based on hazard level. Criteria may restrict certain trades, locations, or impose requirements for approval.
The document discusses the process of insurance underwriting. Underwriting involves evaluating risks to determine whether to issue an insurance policy to an applicant. It aims to select applicants that will likely have claims below assumed losses to ensure a profit. The underwriter considers the applicant's exposure, pricing alternatives like modifying coverage, and monitors policies to maintain satisfactory results for the insurance company. Underwriting balances risks across policyholders and ensures adequate premiums are charged for expected losses.
A comprehensive presentation on the financial risks involved in businesses in general & specifically in banks.
What is Risk?
Generally - Danger, Hazard, Adverse impact, Fear of loss.
Financially-Loss of earnings/capital
May result in incapability of financial institution to meet business goals
Basically there are 4 main risks:
1. Credit Risk
2. Market Risk
3. Liquidity Risk
4. Operational Risk
Financial risk management involves identifying risks facing a business, determining an appropriate risk tolerance, and implementing strategies to manage risks. There are three main sources of financial risk: changes in market prices, actions of other organizations, and internal failures. The risk management process assesses financial risks and develops consistent strategies using tools like hedging, diversification, and derivatives. Key factors that impact financial rates and prices include expected inflation, economic conditions, monetary policy, foreign demand, and political stability.
A brief overview of financial risk management strategies which will be covered in a 2 day workshop on Emerging Markets Investment & Risk Management Strategies on Sept 15-16 2011 in Singapore.
Presented at the MENA-OECD Business Integrity Training, 22-25 April, Kuwait. Organised by the MENA-OECD Investment Programme in cooperation with the IMF-Middle East Center for Economics and Finance
Investment management is a key function for insurance companies to manage investments backing reserves and capital. Zurich Insurance Group commissions its investment management team to generate superior risk-adjusted returns relative to liabilities for shareholders and policyholders. Investment management creates value through a process that includes asset-liability management, strategic asset allocation, market strategy, asset manager selection, portfolio construction, and efficient asset management. The investment strategy aims to maximize economic objectives while minimizing unrewarded risks in order to create long-term value for stakeholders.
Risk management in banks is important as banks are exposed to various risks in the changing Indian economy. The key risks include credit risk, market risk, operational risk, liquidity risk, and interest rate risk. Effective risk management involves identifying, measuring, monitoring, and controlling risks. Banks must have robust policies, strategies, organizational structures, and systems in place to properly manage risks like establishing risk limits, risk grading, and risk mitigation techniques. Proper risk management is essential for the long-term success of banks.
This document defines and describes various risk financing techniques, including risk retention and risk transfer. It discusses self-insurance, captive insurers, and insurance. The key differences between first party and third party insurance, and claims-made vs. occurrence policies are explained. Factors to consider when selecting risk financing techniques include the type and size of organization, financial resources, risk control programs, and long-term costs. The document also discusses reinsurance, policy terms and conditions, and the differences between a soft vs. hard insurance market. It defines the cost of risk and its importance for health care organizations.
FRM - Level 1 Part 1 - Foundations of Risk ManagementJoe McPhail
Enterprise risk management (ERM) involves identifying risks at an entity level, quantifying exposures, establishing a risk appetite framework, monitoring performance against the framework, and amending the strategy as needed. Key challenges for ERM include clearly communicating all material risks, correctly accounting for interactions between risks, and ensuring risk mitigation strategies do not introduce new risks. Setting an effective risk appetite framework requires qualitative and quantitative articulation of acceptable risk limits along with clear communication and responsibility for risk throughout the organization.
Financial Risk Management For ManufacturingDick Lam
The document discusses financial risk management strategies for manufacturing companies during economic downturns. It provides examples of economic stimulus plans from Gordon Brown, Barack Obama, and George Bush in response to the 2008 financial crisis. The document then discusses various risk management strategies companies can adopt, including examining accounts receivable, inventory levels, cash flow, and personnel risks. It emphasizes regularly monitoring key performance and risk indicators to ensure business stability during difficult economic conditions.
This document discusses various techniques for corporate risk financing, including risk transfer through commercial insurance, risk retention using internal funds, and hybrid techniques combining internal and external sources. It provides details on commercial insurance mechanisms and objectives. Key risk financing techniques include insurance, self-insurance through loss reserves, and captive insurance companies owned by an organization to insure its own risks. Choosing an approach involves considering expected losses, financing costs, control, and other factors to select the most cost-effective option.
Financial risk management involves identifying risks, measuring them, and developing plans to address risks, particularly credit risk and market risk. It focuses on when and how to hedge risks using financial instruments. Common risk management techniques across financial firms include independent risk assessments, controls on risk taking, and hedging risks with derivatives or reinsurance. While techniques are similar, firms focus more on risks dominant in their primary business lines, with commercial banks most concerned with credit and funding risks, securities firms with market risk, and insurers with ensuring adequate technical provisions.
The document provides guidelines for commercial banks to manage key risks including credit, market, liquidity, and operational risk. It outlines the following:
1. Risk management should have clear frameworks with oversight from senior management and boards of directors who establish risk appetite.
2. Risks are identified, measured, monitored, and controlled through defined policies, processes, management information systems, and independent review.
3. Specific areas of various risk types are overseen through dedicated risk management committees, departments and measurement systems to ensure prudent risk exposure levels.
4. Contingency planning and regular review of risk management effectiveness is important.
Risk management is a vital process for Islamic banks that consists of several interconnected phases. It includes establishing a risk management framework based on ISO 31000:2009, identifying risks through analysis of products and activities, measuring risks using a composite risk index, developing a risk matrix to plot risks by severity and impact, reviewing risks and monitoring actual risk levels. Effective risk management also requires infrastructure like documentation of policies, an organizational structure with risk management committees, use of information technology systems and databases, and selecting appropriate risk measurement models. The goal is to properly manage both generic financial risks and unique risks to Islamic banks like Sharia non-compliance, displaced commercial, and equity investment risks.
This document provides an overview of a training program on financial risk management. It includes an introduction to key terminology related to derivatives and financial risk. It then covers various types of financial risk like solvency risk, liquidity risk, credit risk and cash flow risk. It also discusses ways to finance a business through debt and equity. Other topics covered include reckless trading and the role of an internal audit function and audit committee in managing financial risk.
A new emphasis on enterprise risk management from regulators has heightened awareness among bankers to get educated and adopt these best practices at their institution. In response to this increased focus, the RMA ERM Council developed the ERM framework and associated competencies, which became the foundation for a series of highly practical workbooks for implementing effective ERM.
This presentation provides a highlight of the key issues in the management of Market Risk. It touches briefly some of the elements of the Basel 2 Accord with respect to Market Risk
Rejda chapter 1 slides risk and its treatmentnlmccready
The document defines risk and discusses techniques for managing risk. It defines risk as uncertainty about potential losses and distinguishes between objective and subjective risk. It also defines chance of loss, perils, hazards, and different types of risk like pure risk and diversifiable risk. Major personal and commercial risks are outlined. Techniques for managing risk include risk control methods like loss prevention and risk financing methods like insurance, which transfers risk to an insurer by pooling together many insured individuals and companies.
Risk management has become an important part of banking operations as banks take on new risks through expanding operations. Effective risk management requires developing markets like repo markets, addressing regulatory gaps, and introducing risk hedging instruments. It also requires banks to implement strong asset-liability management and have oversight of their risk management practices. The document outlines various types of risks banks face, including financial risks, market risks, operational risks, settlement risks, and asset-liability risks. It emphasizes the importance of managing these risks through appropriate policies, procedures, and oversight.
This workshop aims to discuss risk mitigation techniques for Islamic financial institutions. It will provide an overview of conventional and Islamic approaches to risk management, and analyze the types of risks that Islamic banks face from their balance sheets. These include credit, market, and operational risks. The presentation will also explore dispute resolution and Shariah compliance as risk management techniques for the Islamic finance industry.
This document discusses different types of business risk and methods for managing risk. It defines business risk as the risk of loss naturally incurred by owning or operating a business. The main types of risk are insurable risks that can be covered by insurance, and uninsurable risks that are too high for insurance carriers. Businesses can manage risk through avoidance, reduction, retention, and transfer. Avoidance means not taking on risky activities, reduction means minimizing the chances of losses, retention is bearing the costs of losses, and transfer involves purchasing insurance to shift risks to insurance companies.
A recent piece of work I produced on the need for Investment Governance to do with MiFID II, which is relevant to the FCA's comments/review on governance in the asset management industry. Happy to have a further chat, especially around Value for Money of investment propositions.
Do you need to know about Financial (MiFID II) Product Governance? I have written a guide to help those needing more understanding on what Product Governance is. Let me know if you want any further guidance.
A brief overview of financial risk management strategies which will be covered in a 2 day workshop on Emerging Markets Investment & Risk Management Strategies on Sept 15-16 2011 in Singapore.
Presented at the MENA-OECD Business Integrity Training, 22-25 April, Kuwait. Organised by the MENA-OECD Investment Programme in cooperation with the IMF-Middle East Center for Economics and Finance
Investment management is a key function for insurance companies to manage investments backing reserves and capital. Zurich Insurance Group commissions its investment management team to generate superior risk-adjusted returns relative to liabilities for shareholders and policyholders. Investment management creates value through a process that includes asset-liability management, strategic asset allocation, market strategy, asset manager selection, portfolio construction, and efficient asset management. The investment strategy aims to maximize economic objectives while minimizing unrewarded risks in order to create long-term value for stakeholders.
Risk management in banks is important as banks are exposed to various risks in the changing Indian economy. The key risks include credit risk, market risk, operational risk, liquidity risk, and interest rate risk. Effective risk management involves identifying, measuring, monitoring, and controlling risks. Banks must have robust policies, strategies, organizational structures, and systems in place to properly manage risks like establishing risk limits, risk grading, and risk mitigation techniques. Proper risk management is essential for the long-term success of banks.
This document defines and describes various risk financing techniques, including risk retention and risk transfer. It discusses self-insurance, captive insurers, and insurance. The key differences between first party and third party insurance, and claims-made vs. occurrence policies are explained. Factors to consider when selecting risk financing techniques include the type and size of organization, financial resources, risk control programs, and long-term costs. The document also discusses reinsurance, policy terms and conditions, and the differences between a soft vs. hard insurance market. It defines the cost of risk and its importance for health care organizations.
FRM - Level 1 Part 1 - Foundations of Risk ManagementJoe McPhail
Enterprise risk management (ERM) involves identifying risks at an entity level, quantifying exposures, establishing a risk appetite framework, monitoring performance against the framework, and amending the strategy as needed. Key challenges for ERM include clearly communicating all material risks, correctly accounting for interactions between risks, and ensuring risk mitigation strategies do not introduce new risks. Setting an effective risk appetite framework requires qualitative and quantitative articulation of acceptable risk limits along with clear communication and responsibility for risk throughout the organization.
Financial Risk Management For ManufacturingDick Lam
The document discusses financial risk management strategies for manufacturing companies during economic downturns. It provides examples of economic stimulus plans from Gordon Brown, Barack Obama, and George Bush in response to the 2008 financial crisis. The document then discusses various risk management strategies companies can adopt, including examining accounts receivable, inventory levels, cash flow, and personnel risks. It emphasizes regularly monitoring key performance and risk indicators to ensure business stability during difficult economic conditions.
This document discusses various techniques for corporate risk financing, including risk transfer through commercial insurance, risk retention using internal funds, and hybrid techniques combining internal and external sources. It provides details on commercial insurance mechanisms and objectives. Key risk financing techniques include insurance, self-insurance through loss reserves, and captive insurance companies owned by an organization to insure its own risks. Choosing an approach involves considering expected losses, financing costs, control, and other factors to select the most cost-effective option.
Financial risk management involves identifying risks, measuring them, and developing plans to address risks, particularly credit risk and market risk. It focuses on when and how to hedge risks using financial instruments. Common risk management techniques across financial firms include independent risk assessments, controls on risk taking, and hedging risks with derivatives or reinsurance. While techniques are similar, firms focus more on risks dominant in their primary business lines, with commercial banks most concerned with credit and funding risks, securities firms with market risk, and insurers with ensuring adequate technical provisions.
The document provides guidelines for commercial banks to manage key risks including credit, market, liquidity, and operational risk. It outlines the following:
1. Risk management should have clear frameworks with oversight from senior management and boards of directors who establish risk appetite.
2. Risks are identified, measured, monitored, and controlled through defined policies, processes, management information systems, and independent review.
3. Specific areas of various risk types are overseen through dedicated risk management committees, departments and measurement systems to ensure prudent risk exposure levels.
4. Contingency planning and regular review of risk management effectiveness is important.
Risk management is a vital process for Islamic banks that consists of several interconnected phases. It includes establishing a risk management framework based on ISO 31000:2009, identifying risks through analysis of products and activities, measuring risks using a composite risk index, developing a risk matrix to plot risks by severity and impact, reviewing risks and monitoring actual risk levels. Effective risk management also requires infrastructure like documentation of policies, an organizational structure with risk management committees, use of information technology systems and databases, and selecting appropriate risk measurement models. The goal is to properly manage both generic financial risks and unique risks to Islamic banks like Sharia non-compliance, displaced commercial, and equity investment risks.
This document provides an overview of a training program on financial risk management. It includes an introduction to key terminology related to derivatives and financial risk. It then covers various types of financial risk like solvency risk, liquidity risk, credit risk and cash flow risk. It also discusses ways to finance a business through debt and equity. Other topics covered include reckless trading and the role of an internal audit function and audit committee in managing financial risk.
A new emphasis on enterprise risk management from regulators has heightened awareness among bankers to get educated and adopt these best practices at their institution. In response to this increased focus, the RMA ERM Council developed the ERM framework and associated competencies, which became the foundation for a series of highly practical workbooks for implementing effective ERM.
This presentation provides a highlight of the key issues in the management of Market Risk. It touches briefly some of the elements of the Basel 2 Accord with respect to Market Risk
Rejda chapter 1 slides risk and its treatmentnlmccready
The document defines risk and discusses techniques for managing risk. It defines risk as uncertainty about potential losses and distinguishes between objective and subjective risk. It also defines chance of loss, perils, hazards, and different types of risk like pure risk and diversifiable risk. Major personal and commercial risks are outlined. Techniques for managing risk include risk control methods like loss prevention and risk financing methods like insurance, which transfers risk to an insurer by pooling together many insured individuals and companies.
Risk management has become an important part of banking operations as banks take on new risks through expanding operations. Effective risk management requires developing markets like repo markets, addressing regulatory gaps, and introducing risk hedging instruments. It also requires banks to implement strong asset-liability management and have oversight of their risk management practices. The document outlines various types of risks banks face, including financial risks, market risks, operational risks, settlement risks, and asset-liability risks. It emphasizes the importance of managing these risks through appropriate policies, procedures, and oversight.
This workshop aims to discuss risk mitigation techniques for Islamic financial institutions. It will provide an overview of conventional and Islamic approaches to risk management, and analyze the types of risks that Islamic banks face from their balance sheets. These include credit, market, and operational risks. The presentation will also explore dispute resolution and Shariah compliance as risk management techniques for the Islamic finance industry.
This document discusses different types of business risk and methods for managing risk. It defines business risk as the risk of loss naturally incurred by owning or operating a business. The main types of risk are insurable risks that can be covered by insurance, and uninsurable risks that are too high for insurance carriers. Businesses can manage risk through avoidance, reduction, retention, and transfer. Avoidance means not taking on risky activities, reduction means minimizing the chances of losses, retention is bearing the costs of losses, and transfer involves purchasing insurance to shift risks to insurance companies.
A recent piece of work I produced on the need for Investment Governance to do with MiFID II, which is relevant to the FCA's comments/review on governance in the asset management industry. Happy to have a further chat, especially around Value for Money of investment propositions.
Do you need to know about Financial (MiFID II) Product Governance? I have written a guide to help those needing more understanding on what Product Governance is. Let me know if you want any further guidance.
The document provides an overview of the structure and regulatory requirements of mutual funds in India. It discusses the key entities involved like sponsors, trustees, asset management company and their roles and responsibilities.
It outlines the regulatory prescriptions for trustees, including qualification criteria for trustee directors. It also summarizes the rights and obligations of trustees under the regulations, including oversight of the AMC, compliance with investment restrictions, and reporting requirements.
Finally, it mentions the regulatory provisions that must be fulfilled for approval of an AMC, including qualification criteria for AMC directors.
Deloitte has been at the forefront of providing services to help clients - especially for some of the leading financial institutions - to help deal with myriad business and compliance issues presented by financial crime. See More : https://www2.deloitte.com/in/en/pages/finance/topics/forensic.html
Forward-Looking Practices in Wealth ManagementCognizant
To keep up with growing regulations in wealth management sector, firms need to future-proof their operations with a robust risk-control system and transparent trading practices.
StatComp Services was established in 2011 to provide comprehensive statutory and compliance services for small and medium businesses in South Africa. Its vision is to become a preferred outsourced compliance service provider, and its mission is to employ qualified staff to identify client needs and deliver positive returns. StatComp offers statutory and regulatory compliance services, operational risk management, general business compliance support, administrative processes design, recordkeeping solutions, knowledge sharing and training. The services are tailored for small businesses with less than 100 employees and medium businesses with less than 500 employees, targeting industries like law, accounting, auditing and financial services. StatComp promises to deliver the highest quality client service through responsiveness, communication, understanding clients' businesses and needs, cost consideration, and
Training Slides of Certified Compliance Officer to enhance Personal Development, discussing the importance of Compliance.
Some Key-Points:
- The Framework of Compliance
- Corporate Governance
- Compliance Program
For further information regarding the course, please contact:
info@asia-masters.com
www.asia-masters.com
FINRA 2015 Regulatory and Examination prioritiesCliff Busse
This document is the 2015 Regulatory and Examination Priorities Letter from FINRA. It discusses both positive changes in the financial industry over the past decade as well as recurring challenges. The letter focuses on five key areas that contribute to compliance issues: putting customers' interests first, firm culture, supervision/risk management/controls, product/service offerings, and conflicts of interest. FINRA emphasizes the importance of identifying and mitigating conflicts of interest. The letter also outlines FINRA's regulatory priorities for 2015, which include sales practices, financial/operational matters, and market integrity issues. FINRA stresses the obligation of firms to provide timely responses to regulatory information requests.
U.S. importers must correctly quantify value, classify imports, and comply with all import laws or face penalties from aggressive CBP audits. Exporters must also comply with trade laws as noncompliance can severely weaken a company; BIS recommends establishing an export management system. L&V Partners provides cross-functional organizational solutions working with accounting, legal, tax, and trade teams to provide narratives for Sarbanes-Oxley compliance.
In today's increasingly competitive business environment, organizations are engaged in a rat race to retain customers, build up clientele and simultaneously ensure steady growth. Unfortunately, they often get caught in a web of issues which may not be easily controlled and affect performance. Here comes the play of Financial Accounting. Professional accountants have a vital role in commercial success by using their valuable knowledge to provide their organizations/clients a competitive advantage and an accurate picture of their financial position and performance.
Embracing the Consumer Duty Imperative: A Comprehensive GuideRNayak3
With the Financial Conduct Authority introducing changes to its Consumer Duty regulations, this paper elucidates the implications and consequences of non-compliance.
This document discusses managing conduct and behavioral risk in the financial services industry. It outlines that conduct risk refers to business strategies or models that could cause customer harm or negatively impact market integrity. Regulators are increasingly focused on conduct risk and how firms are run rather than just controls. Misconduct can negatively impact a firm's revenue, capital ratios, and strategic position through fines, redress costs, rating impacts, and loss of licenses. The document then discusses the main types of misconduct, risks for retail customers, and how regulators are now taking a behavioral approach to regulation focused on biases and tone within firms. It provides guidance on how firms can effectively manage conduct risk through governance, culture, product design, sales incentives, and by placing customers at
The document discusses corporate ethics and corporate social responsibility. It defines corporate ethics as applying ethical principles to business conduct involving employees, investors, customers, and regulators. It explains that corporate social responsibility involves how companies behave towards and conduct business with internal and external stakeholders in a socially responsible manner. It emphasizes that CSR has become important for companies to have a positive image, attract talent, and satisfy consumers who prioritize socially conscious businesses.
Financial Management in Media Organization.pptxAwaisbaloch11
Financial management in media organizations involves strategic planning, budgeting, allocation, and monitoring of financial resources to ensure efficient operations and sustainability. This includes developing comprehensive budgets, managing various revenue streams like advertising and subscriptions, controlling costs, evaluating investments, and complying with financial reporting regulations. Media organizations in Pakistan face specific challenges like dependence on the advertising market, government censorship, security concerns, and socioeconomic factors that must be considered in financial management strategies.
This job description is for a risk management role. The key responsibilities include identifying various risks like credit, market, operational, and financial risks associated with the business; approving margin trading facilities and ensuring compliance with regulations and policies; directing reviews of access limits to ensure settlement within approved processes; implementing risk management tools; advising on risks related to new business products; periodically reviewing and updating risk frameworks; monitoring credit risks; identifying gaps in systems; and meeting with regulators to discuss risks. The role also involves people management, ensuring service quality standards are met, and efficiently managing the risk management department.
Operation risk management in Private Equity firmsJoseph Kariuki
This document provides an overview of operational risk management strategies for private equity firms. It discusses key operational risks such as cyber risks, compliance and misconduct risks, outsourcing risks, and crisis management. For each risk, the document outlines frameworks and examples of how private equity firms can mitigate exposure. It also includes case studies of operational crises at UBS Bank and Chipotle to demonstrate best practices for crisis response. The overall summary emphasizes that private equity firms should have robust risk management plans in place to prevent issues and protect their reputation and financial performance.
Countering Financial Crime - The Importance of Effective TrainingAperio Intelligence
We are a corporate intelligence and financial crime advisory firm based in the City of London. We specialise in: conducting enhanced due diligence on high risk customers and third parties; integrity due diligence on critical acquisitions and investments; market entry and political risk analysis; and investigations. We provide tailored training and advisory services relating to financial crime, in particular anti-money laundering and sanctions compliance. Our clients include some of the world’s leading regulated financial institutions and corporations. Our team has decades of collective experience in advising clients on financial crime and intelligence gathering, helping them to manage risk and maximise potential.
Contact us today for further information on how we can help you.
Fraud Risk Management | Fraud Risk Assessment - EY IndiaErnst & Young
Check out the edition of fraud risk management & fraud risk assessment understanding the client's organizational structure & business environment. For more details, visit http://bit.ly/1RtohKr.
This presentation by OECD, OECD Secretariat, was made during the discussion “Artificial Intelligence, Data and Competition” held at the 143rd meeting of the OECD Competition Committee on 12 June 2024. More papers and presentations on the topic can be found at oe.cd/aicomp.
This presentation was uploaded with the author’s consent.
This presentation by Thibault Schrepel, Associate Professor of Law at Vrije Universiteit Amsterdam University, was made during the discussion “Artificial Intelligence, Data and Competition” held at the 143rd meeting of the OECD Competition Committee on 12 June 2024. More papers and presentations on the topic can be found at oe.cd/aicomp.
This presentation was uploaded with the author’s consent.
This presentation by Juraj Čorba, Chair of OECD Working Party on Artificial Intelligence Governance (AIGO), was made during the discussion “Artificial Intelligence, Data and Competition” held at the 143rd meeting of the OECD Competition Committee on 12 June 2024. More papers and presentations on the topic can be found at oe.cd/aicomp.
This presentation was uploaded with the author’s consent.
This presentation by OECD, OECD Secretariat, was made during the discussion “Pro-competitive Industrial Policy” held at the 143rd meeting of the OECD Competition Committee on 12 June 2024. More papers and presentations on the topic can be found at oe.cd/pcip.
This presentation was uploaded with the author’s consent.
Collapsing Narratives: Exploring Non-Linearity • a micro report by Rosie WellsRosie Wells
Insight: In a landscape where traditional narrative structures are giving way to fragmented and non-linear forms of storytelling, there lies immense potential for creativity and exploration.
'Collapsing Narratives: Exploring Non-Linearity' is a micro report from Rosie Wells.
Rosie Wells is an Arts & Cultural Strategist uniquely positioned at the intersection of grassroots and mainstream storytelling.
Their work is focused on developing meaningful and lasting connections that can drive social change.
Please download this presentation to enjoy the hyperlinks!
Carrer goals.pptx and their importance in real lifeartemacademy2
Career goals serve as a roadmap for individuals, guiding them toward achieving long-term professional aspirations and personal fulfillment. Establishing clear career goals enables professionals to focus their efforts on developing specific skills, gaining relevant experience, and making strategic decisions that align with their desired career trajectory. By setting both short-term and long-term objectives, individuals can systematically track their progress, make necessary adjustments, and stay motivated. Short-term goals often include acquiring new qualifications, mastering particular competencies, or securing a specific role, while long-term goals might encompass reaching executive positions, becoming industry experts, or launching entrepreneurial ventures.
Moreover, having well-defined career goals fosters a sense of purpose and direction, enhancing job satisfaction and overall productivity. It encourages continuous learning and adaptation, as professionals remain attuned to industry trends and evolving job market demands. Career goals also facilitate better time management and resource allocation, as individuals prioritize tasks and opportunities that advance their professional growth. In addition, articulating career goals can aid in networking and mentorship, as it allows individuals to communicate their aspirations clearly to potential mentors, colleagues, and employers, thereby opening doors to valuable guidance and support. Ultimately, career goals are integral to personal and professional development, driving individuals toward sustained success and fulfillment in their chosen fields.
This presentation by Yong Lim, Professor of Economic Law at Seoul National University School of Law, was made during the discussion “Artificial Intelligence, Data and Competition” held at the 143rd meeting of the OECD Competition Committee on 12 June 2024. More papers and presentations on the topic can be found at oe.cd/aicomp.
This presentation was uploaded with the author’s consent.
This presentation by Professor Alex Robson, Deputy Chair of Australia’s Productivity Commission, was made during the discussion “Competition and Regulation in Professions and Occupations” held at the 77th meeting of the OECD Working Party No. 2 on Competition and Regulation on 10 June 2024. More papers and presentations on the topic can be found at oe.cd/crps.
This presentation was uploaded with the author’s consent.
This presentation by Nathaniel Lane, Associate Professor in Economics at Oxford University, was made during the discussion “Pro-competitive Industrial Policy” held at the 143rd meeting of the OECD Competition Committee on 12 June 2024. More papers and presentations on the topic can be found at oe.cd/pcip.
This presentation was uploaded with the author’s consent.
XP 2024 presentation: A New Look to Leadershipsamililja
Presentation slides from XP2024 conference, Bolzano IT. The slides describe a new view to leadership and combines it with anthro-complexity (aka cynefin).
2. UNDERWRITING
Losses of the few are met by the contribution of many
Each individual risk needs
to bring an equitable
contribution to
the common pool. Few
losses
contribution
Contribution
contribution
contribution
Contribution
contribution
3. OBJECTIVES
Objectives of a regulatory authority (FSA in UK, SECP in
Pakistan):
• Maintaining confidence in the financial system;
• Financial stability of country’s financial system;
• Securing right degree of protection for the consumers;
• Reduction in financial crime e.g. money laundering, fraud &
dishonesty and criminal market misconduct, such as inside
dealing.
4. THE CHANGING NATURE OF THE MARKETPLACE
FOR SMALL BUSINESSES
Regulatory changes
ABI & General Insurance Standard Council voluntary codes are followed by the general
insurance till 2005.
Financial Service Authority (FSA - 2005) introduced the statutory regulation for insurers and
intermediaries.
In 2012, Financial Services Act 2012 split the FSA’s responsibility in:
Financial Policy Committee (FPC) within the Bank of England – Responsible for macro-
prudential regulation & watching for emerging risks to the UK financial system;
Prudential Regulation Authority (PRA), a Bank of England subsidiary – Responsible for the
micro-prudential regulation for the systematically important firms (Banks & Insurers) and
seek to prevent all firms failure & ensure that firms failure do not effect entire financial system;
and
Financial Conduct Authority (FCA) – Responsible for conduct of business regulation across
the financial services industry and prudential regulation of small firms (e.g. Insurance brokers
& IFAs).
5. THE CHANGING NATURE OF THE MARKETPLACE
FOR SMALL BUSINESSES
Regulatory changes
ABI & General Insurance Standard Council voluntary codes are followed by the general
insurance till 2005.
Financial Service Authority (FSA - 2005) introduced the statutory regulation for insurers and
intermediaries.
In 2012, Financial Services Act 2012 split the FSA’s responsibility in:
Financial Policy Committee (FPC) within the Bank of England – Responsible for macro-
prudential regulation & watching for emerging risks to the UK financial system;
Prudential Regulation Authority (PRA), a Bank of England subsidiary – Responsible for the
micro-prudential regulation for the systematically important firms (Banks & Insurers) and
seek to prevent all firms failure & ensure that firms failure do not effect entire financial system;
and
Financial Conduct Authority (FCA) – Responsible for conduct of business regulation across
the financial services industry and prudential regulation of small firms (e.g. Insurance brokers
& IFAs).
6. APPROACH TO REGULATION
Government introduced different rules from time to time for the
development of financial system e.g. in UK FSA adopts Risk-based
approach and Rules-based approaches to regulation.
Risk-based approach (to its monitoring activities) – FSA
identify the key risks to its objectives (discussed in previous slides)
posed by individual firms, markets and market mechanisms, and
new developments and occurrences.
So, greater the risk to financial system, the higher the priority for
regulatory attention.
7. APPROACH TO REGULATION
Rules –based and Principles-based regulation
FSA impose prescriptive rules upon insurers for achieving
its aims.
Now FSA regulatory approach has moved towards
Principles-based approach i.e. removal of prescriptive
rules and focus on outcome according to statement of
good practices issued by regulators e.g. FSA.
8. IMPACT ON THE UNDERWRITING FUNCTION
11 Principles for business by FSA:
• A firm must conduct its business with integrity.
• A firm must conduct its business with due skill, care and diligence.
• A firm must take reasonable care to organize and control its affairs
responsibly and effectively with adequate risk management systems.
• A firm must maintain adequate financial resources.
• A firm must observe proper standards of market conduct.
• A firm must pay due regard to the interests of its customers & treat them
fairly.
9. IMPACT ON THE UNDERWRITING FUNCTION
• A firm must pay due regard to the information needs of its clients & communicate
information to them in a way which is clear, fair and not misleading.
• A firm must manage conflicts of interest fairly, both between itself and its customers
and between a customer and another client.
• A firm must take reasonable care to ensure the suitability of its advice and
discretionary decisions for any customer who is entitled to rely upon its judgement.
• A firm must arrange adequate protection for clients’ assets when it is responsible for
them.
• A firm must deal with its regulators in an open and co-operative way, and must
disclose to the FSA appropriately anything relating to the firm of which the FSA
would reasonably expect notice.
10. IMPACT ON THE UNDERWRITING FUNCTION
FSA principles apply to underwriting:
TCF: A firm must pay due regard to the interests of its customers & treat
them fairly.
A firm must pay due regard to the information needs of its clients & communicate
information to them in a way which is clear, fair and not misleading.
A firm must manage conflicts of interest fairly, both between itself and its
customers and between a customer and another client.
A firm must take reasonable care to ensure the suitability of its advice and
discretionary decisions for any customer who is entitled to rely upon its judgement.
Monitoring & Audit: A firm must take reasonable care to organize and control its
affairs responsibly and effectively with adequate risk management systems.
A firm must conduct its business with due skill, care and diligence.
Training & competence: A firm must conduct its business with due skill, care and
diligence.
11. IMPACT ON THE UNDERWRITING FUNCTION
Treating Customer Fairly (TCF)
FSA require senior management to embed effectively TCF into the firm’s values, culture,
and the way in which it conduct business. TCF must be considered and delivered at
every level. TCF in a competitive marketplace, is important for market share.
Principles relating to integrity, communication (need to be clear, fair and not
misleading), the management of conflicts of interest, and suitability of advice,
need to be addressed by firms.
Important factors:
Poor customer understanding
of financial products
Quality and amount of
documentation
Literacy level Complexity of a product
Numeric understanding Customer focus & priorities
12. IMPACT ON THE UNDERWRITING FUNCTION
FSA States:
• Product development frequently does not take into account risks to the target
customer.
• Incentivisation of sellers favours volume over suitability or quality.
• Firms need to review the impact of TCF over the entire product life cycle.
• Charging is often not transparent or clear.
• Firms appear to place great reliance on customer loyalty to a firm / adviser.
Customer service standards are set by companies & regularly monitored
because it increases client loyalty.
Customer service policy should be communicated to all staff.
13. IMPACT ON THE UNDERWRITING FUNCTION
Activity:
OBSERVE A COMPLAINT PROCEDURE OF UTILITY BILLS / CREDIT CARDS.
Honest with customer, provide information and support in every situation .
Underwriter usually have to work within over all corporate objectives therefore
have limitations due to higher management decisions about risk acceptance e.g.
premium charged from young & inexperienced drivers (worse claims experience).
So high premium to young & inexperience drivers results in increase in uninsured
driver and this will negatively affect the society.
14. IMPACT ON THE UNDERWRITING FUNCTION
Monitoring:
• A firm must conduct its business with due skill, care and diligence.
• A firm must take reasonable care to organise & control its affairs responsibly and
effectively with adequate risk management system.
Organisations (at head office) monitoring reports (e.g. budget reports, reports on
flood / earthquake) are observed and any deviation from the budgets will be reported
to higher management / taking more corrective action e.g. Provision of financial or
physical resources.
At local level, manger will observe their area of responsibility.
In insurance claims frequency and severity is observed for comparison with like
period of insurance.
Similarly, sales data of company staff or sales from intermediaries are also
compared to observe any deviation from profitability, sales etc.
15. IMPACT ON THE UNDERWRITING FUNCTION
Auditing - People will do what is inspected rather than what is expected.
So, auditing is necessary for the success of businesses.
Firms which demonstrate a higher risk are more likely to receive a visit.
Training and competence - A firm must conduct its business with due
skill, care & diligence. Trained & competent underwriters are key to success.
Training & competence (TC) require regulated firm to ensure:
Its employees are competent and remain
competent for the work they do
Level of competence is appropriate to the
nature of the business
Its employees are appropriately supervised Employees competence is regularly reviewed
16. CAPITAL AND SOLVENCY REQUIREMENTS
All businesses including insurer need assets (shares in companies, bonds, property, machinery,
materials or cash on deposit with a bank) available in order to satisfy liabilities such as debts the
business incurs. Capital is also used to develop the products, sales campaigns, new
projects, and for unexpected trading losses.
Assets can be purchased from Founder’s own savings, from the loans or the issue of
shares in the company.
Capital – Money raised from Founder’s own savings, from the loans or the issue of
shares in the company for the purchase of assets.
Capital:
• Long term investments - Some part of Capital may be set aside in long term
investments as a buffer against poor trading conditions.
• Working capital – Capital used for acquisition of running costs e.g. Raw material,
pay employees, pay for manufacturers, interest payments on loans.
17. CAPITAL AND SOLVENCY REQUIREMENTS
Insurance is a financial business. Insurers accept the transfer of
risk, therefore, insurance co. product is bearing of risk and the
fulfilment of the liabilities under its contracts when called upon.
Fulfilment of liabilities require capital and assets.
An insurance company should:
• Estimate their liabilities and future income as accurately as possible.
• Need to have a cushion of assets over and above those anticipated
liabilities.
Level of certainty and type of risk will influence the amount of reserves.
18. CAPITAL AND SOLVENCY REQUIREMENTS
Statutory requirements for capital:
Minimum capital requirement (MCR) – MCR is the highest of 2 amounts: A Base Capital
Requirement and General Insurance Capital Requirement (GICR) an amount that has to be
calculated from the volume and type of business
Threshold condition for authorisation – A UK insurer must have capital resources that are
adequate having regard to the size and nature of its business.
Capital resource requirement (CRR – Compulsory by FSA) – is the greater of MCR and a
risk based calculation which results in a higher Enhanced Capital Requirement (ECR).
Individual Capital Assessment (ICA) – Insurer regularly asses their own capital
requirement adequacy.
Individual Capital Guidance (ICG) – Guidance provided by FSA if FSA think that ECR & ICA
is not satisfactory.
19. CAPITAL AND SOLVENCY REQUIREMENTS
Capital requirement and underwriting function
Underwriter’s aim – Business underwritten will make a profit.
Riskier business require more capital and so return on the premium needed to write it is
higher.
Underwriter should know liability claims are complex and take more time to settle than
property claims. Therefore, liability needs more capital to support the insurance business.
Underwriter should observe expected claims while setting premium for underwriting profit.
Underwriter should have the knowledge of the account results.
20. CAPITAL AND SOLVENCY REQUIREMENTS
Management of capital
An insurer’s ability to manage & protect its capital (use of capital) is an indicator of
its strength and reliability.
An insurer must have a clear understanding of:
• How much capital it has at any point in time;
• How much capital it needs to support its targeted volumes of business;
• How much capital it needs to meet both current & future regulatory capital
requirements; and
• What it plans to do in the event of having:
Too much capital for its planned business volumes;
Too little capital for its plans (not able to write a considerable volume of
business - Purchase reinsurance to increase capacity or use co-insurance)
21. PREVENTION OF FINANCIAL CRIME
FSA’s handbook specifies:
• There must be allocation to a senior manger of the specific responsibility for the
establishment and maintenance of effective systems and controls for the money
laundering risk.
• The firm must assess, manage and monitor its money laundering risk systematically,
with suitable documentation.
• A Money Laundering Reporting Officer (MLRO) must be the focus of anti-money
laundering activity in a firm and must be given adequate resources to do the job
effectively.
Bribery Act 2010
Enable courts and prosecutors to respond more effectively to bribery either at
home or abroad.
22. LEGISLATIVE INFLUENCES
Third Parties (Rights Against Insurers) Act 2010 – deal with liabilities to third parties.
Unfair Contract Terms in Consumer Contracts Regulations 1999 – Apply between a
consumer and a seller or supplier.
Unfair term is one which has not been individually negotiated and which, contrary to the requirement
of good faith, causes a significant imbalance in the parties’ rights and obligations under the contract,
to the detriment of the consumer (not commercial customer).
Key points:
• All terms in such contracts must be in plain intelligible language.
• If an insurer wishes to claim that a term has been individually negotiated, it is the
insurer’s responsibility to demonstrate that fact.
• If a term is found to be unfair, the term will be set aside and the contract will continue to
bind the parties if the contract is capable of being interpreted satisfactorily without the
term in question.
23. LEGISLATIVE INFLUENCES
The regulation do not apply:
Contracts (Rights of Third Parties) Act 1999 – Change the rule of
Privity of the contract (A person can only enforce the contract if they are party to
it i.e. a contract for the benefit of other can’t be enforced by the beneficiary) and
now Third party has a right to enforce a term of the contract.
Contract must make express provision for the enforcement or the 3rd party must be
expressly identified in the contract by name, class or description e.g. any driver
clause in motor insurance.
Insurer not willing to use this and so exclude the term stating that the terms of this
legislation do not apply to the insurance contract.
Definition of the main subject matter of the contract
The adequacy of price or value of the money
24. LEGISLATIVE INFLUENCES
Data Protection Act 1998 – Regulate data transfer and include information
about private individuals.
Rights of individual under ACT:
People may take action & sue.
An underwriter must ensure that data held:
Is disclosed only to those authorised to have Is accurate and relevant
Access to information about the data;
Ability to prevent data processing that may cause damage or distress
Denying the use for direct marketing & Automatic decision taking.
25. LEGISLATIVE INFLUENCES
Compulsory insurance
According to law some type of insurance require that insurers should achieve authorisation
from regulatory authority to transact business e.g. Motor insurance, Employers’ liability (EL)
insurance.
Legislation on insurance:
Road Traffic Act (RTA) 1998 – Individual or business using motor vehicles on road.
Dangerous Wild Animal Act 1976 and Dangerous Dogs Act 1969 .
Riding Establishments Act 1970.
Employers’ liability (Compulsory Insurance) Regulations 1998.
Solicitors (Amendments) Act 1974 and Financial Services And Market Act 2000.
Energy Act 2004 – Liability insurance for operators of nuclear reactor.
Marine pollution liability is compulsory due to various international legislations and
conventions.
26. LEGISLATIVE INFLUENCES
Motor insurance
RTA 1998 and other legislations impose a no. of obligations for administrative
process, underwriting and pricing.
Legislation imposed following conditions:
Insurer will have to obtain declaration from the court in order to avoid the motor
policy on the basis of mis-representation or non-disclosure.
Age or physical condition of persons
driving the vehicle
Condition of the vehicle and its Engine
capacity or value
Number of persons that it carries Time at which, or the areas in which, it is used.
27. LEGISLATIVE INFLUENCES
Employers’ liability (EL) insurance - Require that adequate funds are available to
meet compensation claims in case of injury to employees.
Motor Insurers’ Bureau (MIB) – Formed after agreement between insurers and
government and a central fund is created to compensate the victims of uninsured
motorist. Handle the 3rd party claims and central fund. All insurers in UK must subscribe
to MIB for transacting business.
Article 75 of MIB memorandum entails that insurers are required to accept liability in
circumstances where they would not be liable under the RTA, including:
• Where the insurance has been obtained by fraud, mis-representation or non-
disclosure of material facts;
• Where cover has been back dated;
• Where the use of vehicle is not covered by the policy.
28. LEGISLATIVE INFLUENCES
Social legislation
Insurers are generally free to decide which risks to accept. Legislation derive the
demand for insurance and impose constraints how it is underwritten.
Terrorism, flood, and pollution and unlimited statutory liability for motor insurance are
issues of today.
Disability Discrimination Acts 1995 and 2005 – Make it unlawful that to unfairly
discriminate against disabled people in matters such as employment and the provision of
goods, facilities and services including insurance.
Less favourable treatment is not allowed until supported by the information provided
through risk assessment which include actuarial or statistical data, medical research
information and medical reports about the individuals
Documented underwriting philosophy is beneficial for the insurance company and
its practices.
29. LEGISLATIVE INFLUENCES
Disability Discrimination Acts 1995 has given following rights to individuals:
Principles of the Act:
Employment and Buying or renting land or property
Access to goods, facilities & services (including insurance)
Disabled person should be treated as the person with no disability
Employers, providers of the services, property landlords, etc. must be able to
justify discrimination against a disabled person, if & when it occurs
30. LEGISLATIVE INFLUENCES
Disability – An individual is disabled if they have a physical or mental impairment
which has a substantial and long term adverse effect on his/her ability to carry out
the following normal day-to-day activities:
Conditions excluded from the ACT:
Mobility and Manual dexterity Physical co - ordination
Speech, hearing or eyesight Continence (Voluntary control of urination etc.)
Ability to lift, carry or otherwise move
everyday objects
Memory, or ability to concentrate, learn or
understand
Addiction to, or dependency on, Alcohol,
nicotine or any other substance (unless
medically prescribed)
Seasonal allergic rhinitis, except where it
aggravates the effect of another impairment
Tendency to set fires or steal or physical /
sexual abuse of others
Exhibitionism and Disfigurement due to
tattoos, body piercing etc. and Voyeurism
31. LEGISLATIVE INFLUENCES
Sex discrimination Act 1975 – Prohibits unlawful discrimination on the
grounds of gender unless supported by relevant information (actuarial & statistical data)
e.g. life expectancy (female long life) and lower claims costs for vehicles by women allow
insurer to reduce premium than male. Now due to legislation insurance companies are
not allowed to take into account gender when calculating premium.
Equality Act 2010 – Cover nine characteristics (Protected characteristics):
Age and Disability Marriage and civil partnership
Sex, sexual orientation and
pregnancy and maternity
Gender reassignment and Race,
religion or belief
32. LEGISLATIVE INFLUENCES
Types of discrimination (Cont.)
Indirect discrimination – Applies to age, race, religion or belief, sex and sexual
orientation, marriage and civil partnership and now extend to cover disability and gender
reassignment. It can occur when there is a condition, rule, policy or even practice in a
company that applies to everyone but particularly disadvantages people who share a
protected characteristic.
Rehabilitation of Offender Act 1974 – Enable the convicted persons to ‘ wipe the slate
clean’ for the purpose of gaining employment, once a prescribed period elapsed since
the date of conviction, without further conviction. Conviction become spent. Insurer must
ignore the spent conviction for non-disclosure of material fact.
Exempt occupations, for which disclosure remains irrespective of time for
obtaining employment, include: Teachers Social workers
Child-minders Sports coaches Health workers
33. INTERNATIONAL BUSINESS
Insurance is an international business underwriter should keep in mind senior management
guidelines (strategies) when underwriting business outside the country.
Strategic issues - Strategy will have taken into account:
Practical issues – An insurer which has expanded into other territories may have done so by:
Need to diversify risk more widely and
Profit potential
A desire to support native customers who
trade abroad
Competitive pressures and opportunities
Appointing local agents or representative Using a foreign subsidiary within its own
group or by opening a local branch
Entering a joint venture with another insurer Acquiring a local insurer
34. INTERNATIONAL BUSINESS
Considerations for transacting international underwriting:
• Local legislation may require to purchase certain insurances from locally authorised
insurer
• Some territories insist on state insurers covering all or a %age of certain type of risks
• Local taxes may be payable e.g. fire brigade tax in Germany
• Exchange control and potential of inflation for level of cover and claims
• Documentation requirement to be produced locally
• Cover issue in local market is not desirable to provide abroad e.g. E. quake, flood
35. DELEGATED AUTHORITY
Delegated authority rely heavily on a trusted relationship between insurer and intermediary and must
have an effective auditing and monitoring regime.
It has the potential of conflict of interest (insured – intermediary - insurer) to arise if any discretion to
accept business is given to the intermediary.
Binders – Delegated authority schemes give a great deal of flexibility to the intermediary within the
defined limits.
Policy wording is specially negotiated to fit a particular category of client e.g. warehouse keepers,
hoteliers etc. More business to flow in. Profit sharing with intermediary if the results are good.
Managing general agents – Independent or owned by insurer or broker.
A type of delegated authority arrangements whereby MGA organization not only ‘ holds the
underwriting pen ‘ of the insurer, it also undertakes all other activities of an insurer such as marketing,
selling & administration but does not provide funding for claims which remains with insurance
company. Created due to specific expertise in a given sector so profitable for insurer.
36. CONTRACT CERTAINTY
Def. – Contract certainty is achieved by the complete and final agreement of all
terms between the insured and insurer by the time that they enter into the
contract, with contract documentation provided promptly (within 7 working
days for consumer & 30 days for others) thereafter.
All terms and conditions should be clear and understand by each party of the
contract in order to avoid the dispute. This may cause incorrect estimate of
claims reserving, pricing and allocation of capital.
Contract Certainty Code of Practice – Produced by insurance industry for
general insurance contracts.