Premium adequacy risk management in non-life insurance

Abstract

The adequacy of insurance premium is vital to ensure the continuity of fulfillment the obligations of the insurance company. Factors, such as the inadequacy of models and data, the occurrence of catastrophic losses, changes in regulatory requirements and inadequate managerial decisions can have a considerable influence on the sufficiency of premium. Identifying sources of risk factors for insurance premium inadequacy and finding solutions for avoidance and mitigation of these risks is crucial to preserve the solvency of insurance company. If these activities are not implemented successfully, the insurance company must have additional capital on disposal, which guarantees the fulfillment of its obligations. The aim of this work is to contribute to the elimination or mitigation of the insufficiency of premium, through the presentation of the factors affecting the adequacy of premium and actuarial funded survey of contemporary models and risk management processes. The results of the research presented in this work could be used by actuaries, risk managers, management of insurance companies, and other financial professionals.

Keywords

• insurance premium
• risk management
• solvency