Hello there, Please find the below picture for the questions to answer. The word
ID: 2601519 • Letter: H
Question
Hello there,Please find the below picture for the questions to answer. The word limit is 500words so please devide on to the number of questions, you may for example use more words in one questions than the other which is fine. As long as it 500 words in total to answer all the questions. Not 500 words for each question.
1 AaBbCcD AaBbCcD: AaBb Title |No Spac.. Heading 1 Heading 2 |: .|g.--||||||Normal Blu-aix x, x: | A . ".A- Styles Paragraph Font Area 7-Insurance Claims 1. What is insurer solvency and why is it important? 2. How and why can claims reserving affect insurer solvency? 3. Can you explain the open claims reserve and IBNR reserve? 4. What role does forecasting future claims play in this? 5. Can you provide examples of the types of risks which may be categorised here? 6. What implications do these risks create
Explanation / Answer
Answer 1:-
The solvency of an insurance company is the size of its capital relative to all the risk it has taken, which is all liabilities subtracted from total assets. In other words, solvency is a measurement of how much the company has in assets versus how much it owes. It is a basic measure of how financially sound an insurer is and its ability to pay claims. It helps investors measure the company’s ability to meet its obligations and is similar to the capital adequacy ratio of banks.
Answer 2:-
A high amount of claims reserving can adversely affect insurer solvency because that will result in higher outgo in form of money.
Answer 3:-
Claim reserves that are provisioned for any unknown claim are called “Incurred but not reported”. IBNR is akin to the reserve provision made for claim in transit.
Whereas open claim reserves are reserves set aside for claims lodged but not settled yet.
Answer 4:-
Forecasting future claims helps in better position to guage the amount payable in future out of claims likely to be lodged and hence reseves can be more accurate.
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