Question

Located in the United Kingdom, BestHomeInsurance has expanded to provide homeowners insurance in a number of European jurisdictions. Charles was previously a senior underwriter and now Head of Strategy for BestHomeInsurance’s online strategy. Charles has seen how the company’s business has grown rapidly through its online presence in a number of European countries and he is concerned that growth has been too rapid. As one of his first tasks in his new role Charles has decided to write up a report on the key external factors that must be considered in all premium setting exercises in each of their jurisdictions. What key external factors should be dealt with in Charles’ report?

Answer 1

Key factors are:

1. Age and health of insured:

He should see that the age category of people who are taking insurance, it is seen that many times it has been seen that the insurance company does not give insurance to people who are older or those who are suffering from chronic illness. Charles should see that people who are taking more insurance or people who are taking insurance in which category they are, how old are they and with this at the same time, he should also see whether he is a person with a long illness or a sick person.Because a lot of company refuses to give insurance to aged people because the risk factor is very high in it.

2. Financial stability of the insured

He should see how the financial condition of those who are taking insurance. Because the people who are taking insurance, if it is too poor, or not financially stable then the company is also at risk, it will make a difference in company's growth. Because people who are taking insurance, if it is not financially stable, then they can claim the insurance company for money again and again in small matters.

3. Competition analysis: Why Competition not giving insurance at the same rate.

The most important Charles should see that the rest of the insurance company which is a huge competition for his company is the rate at which his company is giving insurance to the people, why the rest companies are not giving insurance in the rate his company is giving. It can be a big factor because everyone wants the success of their company and the rest of the competitive companies also wants to attract the customers, but instead of doing that, they are giving insurance to the people at a high rate. So people are getting attracted towards his company, so he should see what is the reason why the rest of the company is not insured at a lower rate or the same rate , what could be the reason for not giving it.

4. Environment study

He should also see that in which area the people who are taking insurance live because if people who are taking insurance already take it in an area where there is a lot of danger of natural calamities, If it continues to happen or it is Danger prone area, then in that case his company is also in danger if he is giving insurance to such people.

He should also see that in which area the people who have taken insurance live because if those people live in normal area then there is no problem but if such people are taking insurance which is already a Danger prone area or in an area that is at risk of natural calamities, the company is also at risk. And he and his company may have to pay a lot of this in the future.

5. Material study for creation of homes.

He should also take care of this and check that the type of material that the people who are taking insurance are using at home while building their house, the things that are used to make the house should be of good material If not, then there may be some kind of damage to the house in the future, so it should be investigated that the people who are taking insurance, are using good quality material while making the house. So, he should also check what type of material people are using to build their home.