Chen Discussion 1 Annotated Bibliography Alm, J. (2015). ✓ Solved

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Chen Discussion 1 Annotated Bibliography Alm, J. (2015). A

Alm, J. (2015). A simulation model for calculating solvency capital requirements for non-life insurance risk. Scandinavian Actuarial Journal, 107–123. Alm (2015) pointed out that many actuaries, regulators, and academics were all looking for a single type of insurance that accumulates risks to solve solvency issues and to meet the specification of the EU Solvency II. The solvency risk of an insurance company is based on an estimated method of predicting that assets are not sufficient to cover liabilities at some time point in the future.

Mankaà¯, S., & Belgacem, A. (2016). Interactions between risk taking, capital, and reinsurance for property-liability insurance firms. Journal of Risk & Insurance, 83(4), 1007–1043. Manka௠and Belgacem (2016) indicated that insurance companies must consider solvency and are subject to various restrictions between risk-taking and capital holdings. Reinsurance can disperse the risks assumed by reducing the volatility of losses. For example, catastrophe losses lead to adverse capital shocks, and it hurts the value of the insurance company. Additionally, the interaction between capital and risk has always been the focus of active research, but Risk-Based Capital is also an important indicator of current insurance supervision. However, Manka௠and Belgacem (2016) argued that insurance companies might have defects due to the RBC formula because some risks are overweight, and others are underestimated. As a result, "insurer aggregate risk may increase while capital requirements decrease, resulting in a negative relationship" (p. 1009).

Zimmer, A., Grà¼ndl, H., Schade, C., & Glenzer, F. (2018). An incentive-compatible experiment on probabilistic insurance and implications for an insurer's solvency level. Journal of Risk & Insurance, 85(1), 245–273. Zimmer, Grà¼ndl, Schade, and Glenzer (2018) confirmed that people do not like insurance contracts with the risk of default, and consumers are susceptible to the default risk of insurance companies. Furthermore, Zimmer et al. (2018) indicated that the risk of insurance default is directly related to the willingness of consumers to pay. When the demand for insurance was greatly reduced, the property/casualty insurance market was downgraded. In other words, the company's financial distress is accompanied by a reduction in premium income. Therefore, the safety of an insurance company is not just about attracting customers and increasing business volume; it must also make a significant contribution to shareholder value.

Discussion 2 Chen Operational Risks Under the safety consideration of the financial management of insurance companies, insurance companies always give up part or all the original insured business portfolio; that is, they share the responsibility for the global reinsurance market because of risks taking capacities of insurance companies are limited. Insurance capacity is limited by its funds and provident fund to obtain absolute business scale and stable business performance, enhance competitiveness, and improve economic efficiency. Also, regarding the contribution of the reinsurance mechanism, insurance companies are not prone to the crisis of liquidity due to fluctuations in loss ratios. Insurance companies must consider solvency and are subject to various restrictions between risk-taking and capital holdings. Reinsurance can disperse the risks assumed by reducing the volatility of losses (Manka௠& Belgacem, 2016). The solvency risk of an insurance company is based on an estimated method of predicting that assets are not sufficient to cover liabilities at some time point in the future (Alm, 2015).

Kamalahmadia M. and Mellat-Parastb M. (2016) found that regional supply chains are critical to risk management strategies because they are a means of reducing environmental impact. Insurance companies must also reasonably arrange underwriting risks. Since the population is not large, the Guam insurance market economy is not necessary. Therefore, the support of international reinsurers is indispensable, although they are not interested in this market. Business operational risks are ubiquitous, and risk management is a management process that helps companies minimize risk in a hazardous environment. However, risk management needs to select the most effective way to understand the risk and choose the most effective way to obtain the maximum security assurance management method at the minimum cost. When insurance companies face market openness, legal bans, and product innovations, proper risk management can help reduce decision errors, avoid losses, and increase the value of the business. The safety of an insurance company is not just about attracting customers and increasing business volume; it must also make a significant contribution to shareholder value (Zimmer, Grà¼ndl, Schade, & Glenzer, 2018). Besides, for insurance companies, insurance agents and brokers are the front-line personnel of the company. The company needs to strengthen the training of insurance agents and brokers, and education of similar laws and regulations combined with specific cases. More intuitive and targeted guidance to avoid improper operations and irregularities, improve the agents and brokers' job responsibility, and enhance the quality of service. If the insurance agents and brokers businesses always were rejected by the underwriters, the confidence of the insurance salespersons in the business promotion will be hit. Additionally, risk management is a fundamental critical operational practice and regulatory processes because insurance business sources are all dependent on insurance agents or brokers. Crisis management and decision making are essential to top management when significant incidents occur. If the executive can reduce the time to resolve the crisis, the company can save much damage. Besides, loss prevention and protection are more important topics that need to be considered by leaders.

References

  • Alm, J. (2015). A simulation model for calculating solvency capital requirements for non-life insurance risk. Scandinavian Actuarial Journal, 107–123.
  • Kamalahmadia, M., & Mellat-Parastb, M. (2016). Developing a resilient supply chain through supplier flexibility and reliability assessment. International Journal of Production Research, 54(1), 302–321.
  • Mankaà¯, S., & Belgacem, A. (2016). Interactions between risk taking, capital, and reinsurance for property-liability insurance firms. Journal of Risk & Insurance, 83(4), 1007–1043.
  • Zimmer, A., Grà¼ndl, H., Schade, C., & Glenzer, F. (2018). An incentive-compatible experiment on probabilistic insurance and implications for an insurer's solvency level. Journal of Risk & Insurance, 85(1), 245–273.

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