Aon Energy Course
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Transcript of Aon Energy Course
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Aon Energy Course
Wednesday 6th July 2011
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AIM
Introduction
Underwriter & Underwriting
Underwriting – Tools
Conclusion
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Introduction
Chris Walker – Who?
Berkley – Who?
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Underwriters & Underwriting
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Underwriting
What is it?
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Underwriting
What is it?
Banking :the process of analyzing and structuring a proposed loan?
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Underwriting
What is it?
Banking :the process of analyzing and structuring a proposed loan?
Insurance :the process of pooling of funds from many insured entities in order to pay
for relatively uncommon but severely devastating losses which can occur to these entities
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Underwriters
Define?
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Underwriters
Define?People who take bets on something not happening?
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Underwriters
Define?People who take bets on something not happening?People who collect premium and avoid paying
claims?
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Underwriters
Define?People who take bets on something not happening?People who collect premium and avoid paying
claims?People who argue with brokers as to why they
should not do something and then agree to do it?
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Underwriters
My definition?
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Underwriters
My definition?A person who is charged with exposing capital to
risk with the aim of making a return on that capital.
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Underwriters
My definition?A person who is charged with exposing capital to
risk with the aim of making a return on that capital.
This is done by :
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Underwriters
My definition?A person who is charged with exposing capital to
risk with the aim of making a return on that capital.
This is done by :Profit = earned premium + investment income -
incurred loss - underwriting expenses
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Underwriting Tools
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Underwriting Tools
Risk Identification / Selection :Client types – analysis of types of clients in the risk pool.Hazard – analysis of the types of hazards associatedLocation – focus on region
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Underwriting Tools
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Underwriting Tools
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Underwriting Tools
Product Offering :
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Underwriting Tools
Product Offering :Cover offered – Property
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Underwriting Tools
Product Offering :Cover offered – OEE,
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Underwriting Tools
Product Offering :Cover offered – Construction
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Underwriting Tools
Product Offering :Cover offered – Construction
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Underwriting Tools
Product Offering :Cover offered – Construction
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Underwriting Tools
Product Offering :Cover offered – Property, OEE, Construction etc.
Point of attachment :Primary or excess.
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Underwriting Tools
Point of attachment :Primary or excess.
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Underwriting Tools
Line size choice:Underwriters perception of risk – how attractive?
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Underwriting Tools
Line size choice:Underwriters perception of risk – how attractive?
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Underwriting Tools
Line size choice:Underwriters perception of risk – how attractive?Capacity:
NetReinsuranceClash / Aggregations
Note : Relative size to other similar risks in portfolio.
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Underwriting Tools
External tools:Reinsurance
Treaty• Reduce retention = opportunistic• Increased retention = volatility reduction(Relative size of capacity is not a good indicator of the size or health of the
insurance company ) Facultative Reinsurance
• Opportunistic• Enables larger lines to be written on the original• Remove unacceptable parts of risk.
Broker Leverage on & by brokers
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Underwriting Tools
Internal tools:Benchmarking against:
Similar risksLong term averageActuarial average – set to allow adequate ROC.
Actuarial capital allocation – pricing.Claims management :
TimelyAccurateUnderstanding
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CONCLUSION
Underwriter & UnderwritingNo longer a past time but a profession
Underwriting – ToolsMany and complex :
• Risk identification and selection• Attachment point• Product offered• Line size• Risk lay off and retention
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THANK YOU