Underwriting Process in Insurance

Underwriting Process in Insurance Underwriting Process In order for the insurance companies to make profit and charge the appropriate rate for an insured, they undergo the underwriting process. Underwriting is the process in which an insurance company determines if an applicant is eligible for insurance and the rate they should charge if the applicant is eligible. In simpler words, it is a process of risk classification. The purpose of insurance underwriting is to spread risk among a pool of insured in a way that is both profitable for the insurer and fair to the customer. Insurance companies need to make a profit like many other businesses. Therefore, it doesnt make sense if they sell insurance for everyone who applies for it. They may not want to charge an excessive high rate to the customer and also it is not good for them to charge the same premium to every policyholder. Underwriting enables the company to weed out certain applicants and to charge the remaining applicants premiums that are commensurate with their level of risk (Conra d, Clark, Goodwin, Morse Kane, 2011). The underwriting process consist of evaluating several sources of an applicant and the use of complex pricing models developed by actuaries that help the insurance companies set prices. I will focus on the risk classification along with some of the factors that help the underwriters classify each applicant and the use of insurance credit scoring that allow the insurance companies to price the premiums. Factors An insurance company usually looks at various factors during the underwriting process in order to evaluate a potential customer in terms of risk. These factors enable the insurer to determine whether or not the potential customer is insurable. If the potential customer is determined to be insurable, then these factors will help to place them in the appropriate risk group. Some of the factors considered are age, sex, health history, current health/physical condition, personal family health history, occupation, personal habits/character, financial condition, and hobbies (Clark, et al, 2011). Some people believe that any characteristic over which we have no control, such as gender, race, and age, should be excluded from insurance underwriting and rating practices (Baranoff, Brockett, Kahane, 2009, p.157). This argument reflect the idea that the factors used by insurance companies should be based on the behavior of the people instead of the quality on which they are born. Risk Classification Risk classification plays an important role in the pricing of the policy. The premium that the customer pays will depend on the category he/she belongs to. Underwriters classify the applicants into four types of risk groups: standard risk, substandard risk, preferred risk and uninsurable/declined risk. Standard risk. Individuals who have a likelihood of loss or the probability of filing a claim that is not significantly greater than the average are classified as standard risks. Based on the underwriting standards of the insurance company, the people in this group are given a term of insurance without being charged for any extra fees or be subjected to any policy restrictions and they are charged with the standard premium rate (Clark, et al, 2011). Most individual life and health insurance policies are issued at standard premium rates. Substandard risk. Insured that are classified as substandard risk or rated risk, are those that have a greater chance of filing a claim. Applicants are classified in this group because of their health and/or other factors that makes them more likely to die earlier than those who dont possess these kinds of risk factors (Clark, et al, 2011). They are usually charged a higher than standard rate because of the added risks that they possess. Examples of people that may be in this category are those who possess a history of high blood pressure, diabetes, drugs and alcohol. Or maybe they engage in some dangerous activities like skydiving or rock climbing. Preferred risk. Applicants classified as preferred risks are those who are expected to have an above average life expectancy (Clark, et al, 2011). People in this group are preferred by the insurance companies because of their health history and good habits. They are usually offered a lower rate or preferred rate. Applicants that may belong to this group are nonsmokers or people that have a good health history. Uninsurable risk. Individuals categorized as uninsurable or declined risk are those that pose a risk that is too great for the insurance company to cover. The applicants conditions are so rare or unique that the company may not be able to arrive at a suitable premium (Clark, et al, 2011), so their policies are generally declined. Examples of this category include people who have a serious illness and people who conduct illegal activities. Insurance Credit Scoring in Pricing After classifying the applicants into one of the risk groups, the insurance company needs to set price for the policies. One of the tools used by the insurance companies for pricing is the credit scores that help them determine the adequate premium for each consumer. Insurance scores are confidential rankings based on credit history information. Insurance scores are used to provide insurers with a snapshot to provide service to consumers. The score is derived from the consumers previous credit history. This data allows the insurers to price insurance premiums/rates more accurately. (Almarshary, Erbek Reddic) Insurance scores estimate the probability of having insured file a claim. The variables commonly used to estimate insurance scores include measures of performance on credit obligations, credit-seeking behavior, use of credit, length of credit history, and types of credit used (Powell, 2009). They do not include race, color, religion, national origin, gender, marital status, sexual orientation, age, address, salary, disability, occupation, title, employer, date employed or employment history for scoring purposes (Anonymous, 2009). Insurers have found a strong correlation between insurance claims and credit scores. People with low scores are more likely to file claims than people with high scores (Lankford, 2007). They also discovered that people who made late payments tended to have more claims (Almarshary, et al). Improving credit score can certainly make a big difference in the premiums. More insurers now are considering credit scores when setting premium rates. Credit scoring enables insurers to better assess the risk of future claims. In fact, insurance credit scoring helps insurers to differentiate between higher and lower insurance risk (Almarshary, et al). Therefore, insurers will charge a premium based on the information provided by the credit score. When insurers use insurance scores to improve the accuracy of predicted losses, it benefits individuals and society (Powell, 2009). Premiums are closely related to consumers risk of loss on average, so insurance scores increase the fairness in insurance pricing outcomes. Insurance scoring also adds value to insurance transactions. Because insurance scores are accurate and inexpensive rating variables; it reduces the overall cost of providing insurance and this reduction in cost is applied to the premiums of the customer (Powell, 2009). Many people may not be familiar with the underwriting process, but knowing the factors that affect the decision of the insurers of placing you into one of the risk groups, is very useful. In this way, you can easily know if you can be chosen as a potential customer based on your personal information and even if you are not chosen as a potential customer, you might at least know what to avoid in order to decrease the chance of your policy being rejected. Finally, we have to notice the importance of the credit scores, because many insurance companies used it nowadays to price the premiums. Having a good credit history is a key factor to get a lower premium rate in the policy.

Social Consequences of Industrialisation in Britain

In this report I am going to discuss the social consequences of industrialisation in Britain between 1800- and 1850. I will analyse the trends in population movements from rural settings to the city and discuss their causes. I will also discuss social structures of the time and explain how they were affected by industrialisation. I will analyse wealth in regards to distribution amongst the classes and how they differed.Lastly I will discuss such social conditions as living and working conditions, health and sanitation, law and order and education and reforms and laws which were set up as a means of trying to better people’s lives. Introduction Poverty was a concept that people in Britain in the Victorian age struggled with. Were the destitute victims of circumstances, idle and work shy or the victims of industrialisation?There was also the question of who should be responsible for the poor, should society take care of them or as many believed should they simply be left to thei r own devices? The hymn ‘All things bright and beautiful show a typical view on poverty; ‘The rich man in his castle, The poor man at his gate, God made them high and lowly, And ordered their estate. ’ With the onset of industrialisation and population shift, people began to question their place in society and anticipate whether they could indeed change this. Population migrationThe reasons for migration from the country to the city during the 18th and 19th centuries is mainly threefold, for one the population in the country began to grow, this is attributed to the drop in infant mortality rate and the surplus in births over deaths, secondly the invention of farm enhancing methods drastically reduced the need for an agricultural workforce, that, in conjunction with the development of large mass producing factories within the cities drew people away as there was more employment opportunity.Lastly, the north became a hub for large scale industrialisation as it was i n abundance with raw materials such as coal and iron which fuelled the rate of growth, while the south was the bread basket of the country. The population of northern cities such a Manchester grew from 25,000 in l772 to 303,000 by l850. By 1850, Britain was the only country in the world to have a larger urban population than rural. Social and occupational structure At the beginning of the 19th century, British population was very much ranked in classes; this was a way of assessing ones wealth and developing a social structure.The land owners and nobility were at the top of this structure, these people were the ones in change of the county. This power derived from the fact that only the wealthy land owners were permitted to vote therefore they would only permit laws which benefited themselves. With the rise of industrialization a new ‘middle class’ was born. This was usually wealthy merchants who had invested in factories and become very rich. They were not however alway s land owners and therefore unable to vote.The mill owners began to feel they deserved the right to vote. They indeed paid taxes and contributed heavily to the economy and in many cases were far wealthier than the blue blood land owners. The Whigs saw the middle classes push for the vote as a way to gain power, they knew if they could get a reformation on voting passed they would gain masses of support from the middle class. The Tories however resisted this. After the Whigs came to power in 1830, they tried several times to pass a reformation act, which the Tories repeatedly blocked.This was only passed when Earl Grey appealed directly to the king, who agreed to create more Whig lords. This did not please the Tory lords who then gave in and agreed to pass the Reformation Act. The working class where unaffected by this reformation in voting and began pushing for power and began organising trade unions to stand up for their rights against employers. The employers however banned groups of workers congregating in order to prevent them from rising up. Distribution of wealth Workers at this time were treated very badly, there were no laws specifying working times or wages.Meaning employers could pay as little as they wanted and workers were usually expected to work up to 19 hours per day 6 days a week. Work conditions were usually dangerous and accidents could easily happen. Despite these bad conditions however workers had little choice but to put up with them as work was hard to come by and there were often long lines of unemployed people queuing for their jobs. Many woman and children as young as 3 were employed in the factories until 1819 Cotton Mills act was passed preventing children under 9 from working and children under 16 from working more then 12 hours.Due to this exploitation of workers, the mill owners became fabulously wealthy. In addition to exploiting their workers, areas such as the textile trade imported cheap raw materials and sold them on for a la rge profit. Life in industrial cities Law and order Due to the poverty of many crime rates soared in the 19th century, in 1800 75% of these were petty thefts such as pick pocketing many of these were children, this is explored in Dickens’s Oliver twist, with his depiction of Fagin’s gang of pickpockets.Many people were also involved in marches as a way as campaigning for their rights and gaining fairer wages /wanting the right to vote and actions such as the luddites revolt. The judicial system of the time was varied and punishments such as prison, hanging and deportation was given out. In 1829 the Metropolitan Police were set up and in 1835 towns were allowed to set up their own police force. Education Before 1870, there was no standardised way of educating children in Britain; there was no Free State education until 1891.Prior to this the majority of children receiving education were those of the wealthy they were often educated at home by nannies. Once the boys were old enough (around 10/11) they would be sent to public school i. e. Eaton then progress to law school or become doctors. . Children of the poor were sent out to work when they were deemed old enough, education was not as important as earning a wage. However with the poor law amendment act, children entering the workhouse were also to receive education. Living conditions:Due to the rate of urban expansion houses were built quickly and were of poor quality, with areas often being referred to as ‘slums’. There was often housing shortages which resulted in cramped living spaces were whole families often lived in one room. ‘Hideous slums, some of them acres wide, some no more than crannies of obscure misery, make up a substantial part of the, metropolis †¦ In big, once handsome houses, thirty or more people of all ages may inhabit a single room’ Due to the high rent charges imposed by landlords and the growing demand for jobs many people became homeless an d ived on the streets. The streets were frightening places and this poverty and destitution gave rise to such social problems as alcoholism and prostitution as a way of escaping and making ends meet. Health conditions These cramp conditions also meant little to no sanitation which lead on to the spread of disease such as cholera, typhoid ad smallpox. In an article in 1849, author Henry Mayhew wrote how a ditch ran through the streets of London into which sewage emptied from this ditch the people would also drink. As we gazed in horror at it, we saw drains and sewers emptying their filthy contents into it; we saw a whole tier of doorless privies in the open road, common to men and women built over it; we heard bucket after bucket of filth splash into it’ Bad health for the poor can also be attributed to the corn law of 1804, in that the landowners imposed taxes on imported corn to protect their profits, thus making the price of bread, a staple of the poor mans diet, far more e xpensive. This in conjunction with a bad harvest in 1816 meant prices became higher still.Edwin Chadwick was a huge influence on the development of sanitation when he published ‘The Chadwick Report’ The Chadwick report In 1837, there were epidemics of influenza and typhoid. Edwin Chadwick was asked to compile a report looking at the living conditions of the poor. He conducted his report between 1839 and 1841. In his report he argued that disease was a direct result of poor sanitary conditions, concluding that reform must be made. In 1848 the ‘Public Health Act’ was passed. This act ensured that water and sewage supplies were clean as well as cleaning the streets and refuse collection was introduced.Chadwick was appointed Sanitation Commissioner and also president of the association of public sanitary inspectors in 1884. During his time in these roles he argued ways public health could be improved. These included the availability of fresh, clean water, water closets in every house and a sewage network which disposed of waste far away from inhabited areas. The old poor law The old poor law was introduced in 1601 and gave help to any poor person within the parish be it through monetary means, medical or the giving of food. This relief was paid for via poor rate, which was paid by local taxes.By 1832, the country was paying ? 7 million per anum to the able bodied poor and topping up low wages, something which the wealthy disagreed with. They argued that this encouraged laziness as a man knew he could work less and receive the same amount of money. They also argued it would have a negative effect on labouring, thus plunging the country into poverty. In 1834 a report was commissioned into bettering the welfare of the poor and reducing the government’s expenditure. The findings of this report lead onto the reform of the poor law. The poor law amendment act 1834Under this new act, the parishes were grouped into unions and each union wa s to build a workhouse. The unions were prevented from giving outside help to the poor and help was only accessible to those willing to give up their homes and enter the workhouses. The workhouses were deemed the ultimate humiliation to the poor and was meant to act as a deterrent to the able bodied poor. Conditions inside the workhouses were purposely bad and families were split up and sent to different living quarters. They were fed on basic food rations and children received education within the workhouses in exchange for several hours of daily manual labour.The workhouses were very unpopular and not all people agreed with the poor law. Richard Oastler referred to the workhouses as ‘prisons’ and several workhouses such as Andover Workhouse were published in the media for their horrific conditions. Charles dickens also sympathised with the poor stating in his novels that individuals in the workhouse were treated worse than criminals. ‘we have come to this absurd , this dangerous, this monstrous pass, that the dishonest felon is, in respect of cleanliness, order, diet, and accommodation, better provided for, and taken care of, than the honest pauper. Due to this the government set strict rules for the running of the workhouse. They were not always followed however. Conclusion It is evident that this period of history had a profound and ever-changing effect on the society of Britain, which can still be seen today. Many people suffered, sacrificed and fought for the rights to change their circumstances. New innovations and developments meant Britain became an industrial giant, and one of the wealthiest countries of its time. As well as a positive effect, like all things, there is also a negative. For the vast wealth created there were those who were exploited and became destitute.It can be argued however that this was necessary and without the suffering, progression would not have been possible. —————— ————————– [ 1 ]. C. Alexander 1848 [ 2 ]. Early Victorian Britain, J. F. C Harrison, Fontana press, London, 1988, Page 18 [ 3 ]. http://www. flowofhistory. com/units/eme/17/fc113 retrieved 20/01/12 [ 4 ]. http://www. spartacus. schoolnet. co. uk/Pwhigs. htm, retrieved 1/12/11 [ 5 ]. Early Victorian Britain, J. F. C Harrison, Fontana press, London, 1988, Page 39 [ 6 ]. Summary of the duties of a justice of the peace out of sessions, H Pye, J Butterworth and sons 1827, Page 43 [ 7 ]. ttp://vcp. e2bn. org/teachers/11466-timeline. html retrieved 28/1/12 [ 8 ]. http://www. bbc. co. uk/history/trail/victorian_britain/education_health/laissez_faire_07. shtml retrieved 28/1/12 [ 9 ]. The Victorian underworld, K Chesney, Penguin books, 1991 [ 10 ]. http://www. hiddenlives. org. uk/articles/poverty. html retrieved 28/1/12 [ 11 ]. http://www. spartacus. schoolnet. co. uk/PRcorn. htm retrieved 28/1/12 [ 12 ]. Edwin Chadwick, Poor la w and public health, R Watson, Longman group limited, England, 1990, page 6-15 [ 13 ]. A Christmas carol, C Dickens, Broadveiw press, 2003 page 204.

Movie Industry Essay

1)What competitive forces have challenged the movie industry? The movie industry is challenged by increased levels of high-speed Internet access, improved PCs with DVD readers and writers, easy-to-carry video devices, and leading-edge file-sharing services. These forces make the video download easier and faster than ever before. 2)What problems have these forces created? Meanwhile, benefits are not the only things came with these competitive forces, problems came as well. The movie industry has a recession. They cannot make revenue as much as before by releasing movies, people more like to download a free movie or even it is illegal rather than buy tickets or buy a DVD home. At the same time, these free download things also involve copyright infringement. Most of these download sources are from people who have no permission to upload these movies or clips. 3) What changes have these problems caused the movie and television studios to make? Movie companies have to make some changes to adapt to the market. They cooperate with sites such as CinemaNow and Movielink to sell downloadable movies online with a 24-hour watch time limitation. Describe the impact of disruptive technology on the companies discussed in this case. YouTube, a video-sharing website, started their operation up in 2005. Many YouTubers upload movies or movie clips without permission which infringe the right of major studios, including NBC Universal, Time Warner’s Warner Brothers Entertainment, and News Corporation’s Twentieth Century Fox. YouTube cannot deal with this situation well, because hot movie clips are from multiple users and they can be moved as quickly as they were posted. Major studios have a recession on the DVD market, and this infringement behavior leads they lose money in cinemas. Q3. 1)How have the movie studios responded to YouTube? The movie studios are seeking $1. 25 billion from YouTube. And before 2007, after Google purchased YouTube, the movie studios seek a way to cooperate with YouTube about establishing licensing agreements which make copyright content available legally. 2)What is the goal of the response? The goal of the response is to protect their rights from infringement. And their negotiation shows that the movie studios have realized it is important to put more attention to online digital market. The movie industry should move forward to a new potential market. 3) What can the movie studios learn from the music industry’s dealings with online digital music and copyright infringement? The movie studios should know it is an irresistible trend that improvements of the movie and music markets move towards to digitized media. Digitized media can promote new releases on time-saving and money-saving bases. And it is important protect copyright if you do not want to lose revenue in a biggest movie and music market. Q4. Should motion picture companies continue to use YouTube to promote their new films? Why or why not? Motion picture companies should continue to use YouTube to promote their new releases. There are three reasons. First, promotion on YouTube is time-saving. YouTube, this heavy traffic website, has millions of visitors which are much more than other video-sharing websites. Thousands of people around the world upload, download, watch and comment on YouTube every second. YouTubers can see a new release at the same time its promotion posted. Second, it is more money-saving. Promotion online saves the cost of advertising expenses (prints and related fees), DVDs stocks, shipping expenses and salaries of salesperson and other expenses in real-life stores. Third, it is trend that world is becoming smaller because of the Internet, and online promotion or release will be the most efficient way for a new product.

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