Holicent
VIP Contributor
Insurance is a business that requires a lot of research, planning and decision making. These decisions aren't always made in a vacuum. Insurance companies need to know what type of risk they're dealing with so they can determine how much coverage to offer and how to price it.
There are three main types of risk that insurance companies take on:
Actuarial risk is the risk that an insurer will be unable to pay claims in full when they are due. If an insurer has too much exposure to this type of risk, it will not be able to offer enough cover at competitive prices.
Legal risk is the risk that an insurer will be sued by customers for failure to perform under their policy. This can happen if a claim is rejected by the insurance company but later found valid by a court or tribunal.
Political risk is the possibility that government laws and regulations could change, either positively or negatively, resulting in an insurer having to change its policies or sell out of certain lines of business.
There are three main types of risk that insurance companies take on:
Actuarial risk is the risk that an insurer will be unable to pay claims in full when they are due. If an insurer has too much exposure to this type of risk, it will not be able to offer enough cover at competitive prices.
Legal risk is the risk that an insurer will be sued by customers for failure to perform under their policy. This can happen if a claim is rejected by the insurance company but later found valid by a court or tribunal.
Political risk is the possibility that government laws and regulations could change, either positively or negatively, resulting in an insurer having to change its policies or sell out of certain lines of business.
