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PROMPT PROCESSING OF CLAIMS MAKES AN EDGE IN
NON-LIFE INSURANCE BUSINE
A PROJECT RESEARCH
Submitted to:
FACULTY OF MANAGEMENT STUDIES
MASTER OF BUSINESS ADMINISTRATION
CHAPTER I
THE PROBLEM AND ITS BACKGROUND
Introduction
Facing risks is part of everyone's life. A whole range of risks could be enumerated to illustrate this statement. Examples of destructive scenarios that just cause some annoyance to the people involved, but which are also classified as 'risks' - to calamities like a fire, flood, an accident , that have a huge impact on one's economic and personal situation. Economic agents are risk averse in the sense that they are aware of risks with a huge economic impact and will look for ways to transfer these risks (partially or totally) to other players on the market. A whole sector of activities was born in light of this risk aversion: the non-life insurance business.
Claims occur at a certain point in time, consequently they are declared to the insurer (possibly after a period of delay) and one or several payments follow until the settlement of the claim. Depending on the nature of the business, the development of claims may take several calendar years due to, for instance, long legal procedures or several indemnities that have to be paid out during a recovery period. How earned premiums are linked with claims paid for the corresponding contract depends on the branch of the risk: the premium income of a certain accounting period is either linked to the claims paid out in the same period, either are payments connected with the moment of notification of the claim and the premiums earned during that period.
Fundamentally, estimates of claim liabilities are forecasts subject to estimation errors. The actuary responsible for making the forecast must select and apply one or more actuarial projection methods, interpret the results, and apply judgment. Performance testing of an actuarial projection method can provide empirical evidence as to the inherent level of estimation error associated with its forecasts. Often in non-life insurance, claim reserves are the largest position on the liability side of the balance sheet. Therefore, the estimation of adequate claim reserves for a portfolio consisting of several runoff subportfolios is relevant for every non-life insurance company.
STATEMENT OF THE PURPOSE
The study specifically aims to seek answers to the following question:
1. How do non life insurance company accelerate in the insurance claims process?
2. What are the keys areas of competitiveness in non life insurance business?
3. What is the most important area of competitiveness in the non life insurance insurance business?
4. How does company A compare with company B in terms of
NON-LIFE INSURANCE BUSINE
A PROJECT RESEARCH
Submitted to:
FACULTY OF MANAGEMENT STUDIES
MASTER OF BUSINESS ADMINISTRATION
CHAPTER I
THE PROBLEM AND ITS BACKGROUND
Introduction
Facing risks is part of everyone's life. A whole range of risks could be enumerated to illustrate this statement. Examples of destructive scenarios that just cause some annoyance to the people involved, but which are also classified as 'risks' - to calamities like a fire, flood, an accident , that have a huge impact on one's economic and personal situation. Economic agents are risk averse in the sense that they are aware of risks with a huge economic impact and will look for ways to transfer these risks (partially or totally) to other players on the market. A whole sector of activities was born in light of this risk aversion: the non-life insurance business.
Claims occur at a certain point in time, consequently they are declared to the insurer (possibly after a period of delay) and one or several payments follow until the settlement of the claim. Depending on the nature of the business, the development of claims may take several calendar years due to, for instance, long legal procedures or several indemnities that have to be paid out during a recovery period. How earned premiums are linked with claims paid for the corresponding contract depends on the branch of the risk: the premium income of a certain accounting period is either linked to the claims paid out in the same period, either are payments connected with the moment of notification of the claim and the premiums earned during that period.
Fundamentally, estimates of claim liabilities are forecasts subject to estimation errors. The actuary responsible for making the forecast must select and apply one or more actuarial projection methods, interpret the results, and apply judgment. Performance testing of an actuarial projection method can provide empirical evidence as to the inherent level of estimation error associated with its forecasts. Often in non-life insurance, claim reserves are the largest position on the liability side of the balance sheet. Therefore, the estimation of adequate claim reserves for a portfolio consisting of several runoff subportfolios is relevant for every non-life insurance company.
STATEMENT OF THE PURPOSE
The study specifically aims to seek answers to the following question:
1. How do non life insurance company accelerate in the insurance claims process?
2. What are the keys areas of competitiveness in non life insurance business?
3. What is the most important area of competitiveness in the non life insurance insurance business?
4. How does company A compare with company B in terms of