–Rates and premiums are determined by an actuary, using the company’s past loss experience and industry statistics

1)    BASIC OBJECTIVE IN CLAIMS SETTLEMENT- the first objective in settling claims is to verify that a covered loss has occurred. and the second objective is the fair and prompt payment of claims. and the third objective is to provide personal assistance to the insured after a covered loss occurs.

2)    TYPES OF CLAIMS ADJUSTORS- the persons who adjusts a claim is known as a claims adjustor. An insured’s officer agent often has authority to settle small first party claims up to some maximum limit. A company adjustor can settle a claim up to 20,000. the adjustor is usually a salaried employee who represents only one company. An independent adjustor can also be used to settle claims. An adjustment bureau can be used to settle claims. and A public adjustor can be involved in settling a claim. a public adjustor, however represent the insured rather than the insurance company and is paid a fee based on the amount of the claim settlement.

3)    STEPS IN SETTLEMENT OF A CLAIM- There are several important steps in settling a claim. notice of loss is the first step is notify the insurer of  a loss. a provision concerning notice of loss is usually stated in the policy. after notice is received the next step is to investigate the claim an adjustor must also determine the amount of the loss. An adjustor may require a proof of loss before the claim is paid. A proof of loss is a sworn statement by the insured that substantiates the loss. after the claim is investigated, the adjustor must make a decision concerning payment.

1)      STATEMENT OF UNDERWRITING POLICY- An insurer must establish an underwriting policy that is consistent with company objectives. the objective may be a large volume of business with a low profit margin or a smaller volume with a larger margin of profit. the insurer’s underwriting policy is determined by top-level management in charge of underwriting. the underwriting policy is stated in detail in an underwriting guide that specifies the lines of insurance to be written.

2)      BASIC UNDERWRITING PRINCIPLES- There are some three important principles are as follows. the first principle is that the underwriter must select prospective insured according to the company’s underwriting standards , second is underwriting principle is to have a proper balance within each rate classification. and the third is underwriting principle is equity among the policy owners.

3)      STEPS IN UNDERWRITING- After the insurer’s underwriting policy is established, it must be communicated to the sales force. initial underwriting starts with the agent in the field. Agent as first underwriter this step is often called field underwriting. the agent is told what types of applicants are acceptable, borderline, or prohibited. sources of underwriting information the type of information varies by type of insurance. the application is a basic source of underwriting information. an agent’s report is another source of information. and an another source of information most companies require the agent to give an evaluation of the prospective insured. a physical inspection may also be required before an application for property and liability insurance is approved.

making an underwriting decision there are three basic underwriting decisions with respect to an initial application for insurance, accept the application ,accept the application subject to certain restrictions or modifications and the reject the application.

4)      MAKING AN UNDERWRITING DECISION- after the underwriter evaluates the information, an underwriting decision must be made. there are three basic underwriting decisions with respect to an initial application for insurance. first is accept the application, accept the application subject to certain restrictions or modifications and reject the application. many insurance now use computerized underwriting for certain personal lines of insurance that can be standardized.  

i) Rate making and insurance pricing

ii) Underwriting 

iii) Production

iv) Claim settlement

v) Reinsurance

vi) Investment

i) Rate making and insurance pricing

ii) Underwriting 

iii) Production

iv) Claim settlement

v) Reinsurance

vi) Investment