scholarly journals COMPUTATION OF BONUS IN MULTI-STATE LIFE INSURANCE

2021 ◽  
pp. 1-41
Author(s):  
Jamaal Ahmad ◽  
Kristian Buchardt ◽  
Christian Furrer
Keyword(s):  
Life Insurance ◽  
Financial Risk ◽  
Insurance Risk ◽  
Numerical Example ◽  
Market Values ◽  
The Past ◽  
Bonus Payments ◽  
Insurance Business

Abstract We consider computation of market values of bonus payments in multi-state with-profit life insurance. The bonus scheme consists of additional benefits bought according to a dividend strategy that depends on the past realization of financial risk, the current individual insurance risk, the number of additional benefits currently held, and so-called portfolio-wide means describing the shape of the insurance business. We formulate numerical procedures that efficiently combine simulation of financial risk with classic methods for the outstanding insurance risk. Special attention is given to the case where the number of additional benefits bought only depends on the financial risk. Methods and results are illustrated via a numerical example.

scholarly journals On Valuation and Risk Management at the Interface of Insurance and Finance

2002 ◽  
Vol 8 (4) ◽  
pp. 787-827 ◽  
Author(s):  
T. Møller
Keyword(s):  
Financial Markets ◽  
Life Insurance ◽  
Financial Risk ◽  
Insurance Risk ◽  
Indifference Pricing ◽  
Insurance Contracts ◽  
The Past ◽  
Market Shares ◽  
Quadratic Hedging ◽  
Mean Variance

ABSTRACTThis paper reviews methods for hedging and valuation of insurance claims with an inherent financial risk, with special emphasis on quadratic hedging approaches and indifference pricing principles and their applications in insurance. It thus addresses aspects of the interplay between finance and insurance, an area which has gained considerable attention during the past years, in practice as well as in theory. Products combining insurance risk and financial risk have gained considerable market shares. Special attention is paid to unit-linked life insurance contracts, and it is demonstrated how these contracts can be valued and hedged by using traditional methods as well as more recent methods from incomplete financial markets such as risk-minimisation, mean-variance hedging, super-replication and indifference pricing with mean-variance utility functions.

scholarly journals A TREE-BASED ALGORITHM ADAPTED TO MICROLEVEL RESERVING AND LONG DEVELOPMENT CLAIMS

2019 ◽  
Vol 49 (03) ◽  
pp. 741-762 ◽  
Author(s):  
Olivier Lopez ◽  
Xavier Milhaud ◽  
Pierre-E. Thérond
Keyword(s):  
Life Insurance ◽  
Great Success ◽  
Business Sustainability ◽  
The Past ◽  
Insurance Business

AbstractIn non-life insurance, business sustainability requires accurate and robust predictions of reserves related to unpaid claims. To this aim, two different approaches have historically been developed: aggregated loss triangles and individual claim reserving. The former has reached operational great success in the past decades, whereas the use of the latter still remains limited. Through two illustrative examples and introducing an appropriate tree-based algorithm, we show that individual claim reserving can be really promising, especially in the context of long-term risks.

Life Insurance Industry Agent’s Attrition: A Game Changer for Insurance Business

2020 ◽  
pp. 097215091986145
Author(s):  
Neha Chhabra Roy ◽  
N. G. Roy
Keyword(s):  
Life Insurance ◽  
Financial Risk ◽  
Insurance Industry ◽  
Extensive Literature ◽  
Insurance Sector ◽  
Life Insurance Industry ◽  
Central Argument ◽  
Recent Trends ◽  
Insurance Business ◽  
Game Changer

Insurance industry of any country acts as the backbone of its financial risk management system. Although two-thirds of the insurance business in India is carried out through individual agents, recent trends show significant attrition among them. The central argument in this article revolves around identifying the drivers responsible for individual agent’s attrition in India. The methodology used for this factor identification was based on extensive literature review and further validation through a primary survey of the stakeholders in the insurance sector. A conceptual model is also proposed for mitigation of agent’s attrition.

scholarly journals EFFICIENT HEDGING AND PRICING OF EQUITY-LINKED LIFE INSURANCE CONTRACTS ON SEVERAL RISKY ASSETS

2008 ◽  
Vol 11 (03) ◽  
pp. 295-323 ◽  
Author(s):  
ALEXANDER MELNIKOV ◽  
YULIYA ROMANYUK
Keyword(s):  
Life Insurance ◽  
Financial Risk ◽  
Risk Preference ◽  
Financial Assets ◽  
Insurance Risk ◽  
Risky Assets ◽  
Insurance Contracts ◽  
Maturity Date ◽  
Efficient Hedging ◽  
Probabilistic Result

The paper uses the efficient hedging methodology in order to optimally price and hedge equity-linked life insurance contracts whose payoff depends on the performance of several risky assets. In particular, we consider a policy which pays the maximum of the values of n risky assets at some maturity date T, provided that the policyholder survives to T. Such contracts incorporate financial risk, which stems from the uncertainty about future prices of the underlying financial assets, and insurance risk, which arises from the policyholder's mortality. We show how efficient hedging can be used to minimize expected losses from imperfect hedging under a particular risk preference of the hedger. We also prove a probabilistic result, which allows one to calculate analytic pricing formulas for equity-linked payoffs with n risky assets. To illustrate its use, explicit formulas are given for optimal prices and expected hedging losses for payoffs with two risky assets. Numerical examples highlighting the implications of efficient hedging for the management of financial and insurance risks of equity-linked life insurance policies are also provided.

Effective Customer Support System of Life Insurance Companies

2014 ◽  
Vol 4 (2) ◽  
Author(s):  
Rajesh Srivastava ◽  
Dr. Preeti Sharma
Keyword(s):  
Life Insurance ◽  
Economies Of Scale ◽  
New Technologies ◽  
Insurance Industry ◽  
Integrated Approach ◽  
Customer Experience ◽  
Disruptive Innovation ◽  
Insurance Companies ◽  
Insurance Business ◽  
Strategic Imperative

Increased competition, new technologies and the shift in power from the provider to the customer have produced unrelenting pressure on life insurance business. The market forces point to one overwhelming strategic imperative: customer-focused strategy. Customers are willing to build long-term relationships based on trust and mutual respect with firms that provide a differentiated and personalized service offering. Over the past few years, life insurance industry responded to intensified competition and high customer attrition by entering each other’s markets to capture greater “wallet share” and ostensibly lower their economies of scale. The service delivery process is influenced by quality of personnel, information technology, internal processes, human resource practices, and even an institution’s own change orientation. Now a day’s customers are demanding seamless, multi-channel sales and service experiences. Simultaneously, other players are looking for opportunities to invade this space or to redefine it through disruptive innovation. The result is forcing life insurance companies to examine a more balanced, integrated approach to the customer experience and growth. This research, we analyze the need, preference and satisfaction of customers in life insurance business and provide perspective on how to improve the customer experience.

scholarly journals The Reduction of Initial Reserves Using the Optimal Reinsurance Chains in Non-Life Insurance

Mathematics ◽  
2021 ◽  
Vol 9 (12) ◽  
pp. 1350
Author(s):  
Galina Horáková ◽  
František Slaninka ◽  
Zsolt Simonka
Keyword(s):  
Life Insurance ◽  
Continuous Time ◽  
Ruin Probability ◽  
Proportional Reinsurance ◽  
Insurance Risk ◽  
Optimal Reinsurance ◽  
Insurance Contracts ◽  
Time Period ◽  
Different Types ◽  
Capital Injections

The aim of the paper is to propose, and give an example of, a strategy for managing insurance risk in continuous time to protect a portfolio of non-life insurance contracts against unwelcome surplus fluctuations. The strategy combines the characteristics of the ruin probability and the values VaR and CVaR. It also proposes an approach for reducing the required initial reserves by means of capital injections when the surplus is tending towards negative values, which, if used, would protect a portfolio of insurance contracts against unwelcome fluctuations of that surplus. The proposed approach enables the insurer to analyse the surplus by developing a number of scenarios for the progress of the surplus for a given reinsurance protection over a particular time period. It allows one to observe the differences in the reduction of risk obtained with different types of reinsurance chains. In addition, one can compare the differences with the results obtained, using optimally chosen parameters for each type of proportional reinsurance making up the reinsurance chain.

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