Profitability
Expenses
Losses
Rate Adequacy
Misc.
100
Travelers target ROE is __________.
What is mid-teens (15%) over time.
100
Payments made to insurance agents / brokers as compensation for the policies they write are known as ___________.
What are commissions?
100
Broad expenses necessary to run the operation of a company is known as _________.
What is ULAE or Unallocated Loss Adjustment Expenses?
100
Taking 5pts. of rate means
What is increase rates by 5%?
100
This is the most profitable type of premium
What is Rate $?
200
Underwriting Profit is calculated by ________.
What is UW Profit = Premium - Loss - Expenses?
200
Name the components of TL&F.
What are taxes, licenses, and fees?
200
An example of Allocated Loss Adjustment Expense is _________.
What is: a Restaurant is sued, and we need an expert on the viscosity of tile floor to determine slip potential and whether it was the customer’s fault or the restaurants?
200
The IT department needs to hire 10 more developers. What happens to UW Profit & Rate Need?
What is UW Profit down, Rate Need up?
200
Explain long-tail vs short-tail and give an example of each.
What is: Long-tail (ex. WC, bodily injury) a claim that takes longer to pay out and short-tail a claim that is completed quickly (ex. car accident)?
300
The three components of Net Income
What are Fee Income, Net Investment Income, and Underwriting Profit?
300
The “premium dollar” is approximately made up of ____% of expenses
What is ~30%?
300
Two internal items that increase claim costs
What is taking on more risk and facing labor shortages.
300
In Select, we say Rate Adequacy Indication. In PI, we say _____.
What is Pricing Combined Ratio Variance (PCRV)?
300
What results in higher investment $: long-tail or short-tail?
What is long-tail?
400
These are 3 ways to improve UW Profit
What are underwriting, pricing, expense control?
400
These are 3 types of expenses included in OIE.
What are: marketing, staff salaries, support services, IT costs, rent/utilities, etc?
400
This ratio indicates how much risk the surplus supports with a higher ratio indicating the more the insurer has to rely on surplus to cover potential liabilities
What is Loss Reserves to Surplus
400
Fill in the table below:
400
The countrywide Combined Ratio decreases 10% . What happens to UW Profit and Rate?
What is: UW Profit goes up, Rate goes down?
500
These are 3 ways we measure profitability (give formulas where applicable).
What are CR, ROE, and Rate Adequacy?
CR = (Losses + Expenses) / Earned Premium
ROE = Net Income / Surplus
500
The difference in expense allocation for DTC vs. IA companies
What are larger expenses for independent agencies because of commissions?
500
The formula for Direct Loss is ______.
What is Direct Loss = Incurred Loss & ALAE + IBNR?
500
This is what rate adequacy indications tell us that the controllable income statement does not.
What is CIS does not adjust for rates or tell us how much to change our rates to hit our target ROE?
500
Travelers current investment portfolio is around $___.
What is about $98B?