O'Reilly logo

Foundations of Financial Risk: An Overview of Financial Risk and Risk-based Financial Regulation, 2nd Edition by Christopher Donohue, Giacomo Indiveri, Richard Apostolik, GARP

Stay ahead with the world's most comprehensive technology and business learning platform.

With Safari, you learn the way you learn best. Get unlimited access to videos, live online training, learning paths, books, tutorials, and more.

Start Free Trial

No credit card required

CHAPTER 9 Insurance Risk

This chapter addresses the structure and risks of the insurance industry. Many banks offer insurance products alongside banking products, or own insurance companies as subsidiaries. As a result, the risks associated with the insurance industry can be a significant component of a bank's over­all risk profile. This chapter begins by describing the typical business model of insurance companies—which is quite different from the business model of a bank—and then examines the two principal types of insurance: property and casualty (P&C) and life insurance.

Chapter Outline

  • 9.1 Introduction to the Insurance Industry
  • 9.2 Property and Casualty Insurance
  • 9.3 Life Insurance
  • 9.4 Reinsurance
  • 9.5 Other Types of Risk
  • 9.6 Regulation and Supervision—Solvency 2 in the European Union
  • 9.7 The Role of Lloyd's of London
  • 9.8 Summary

Key Learning Points

  • Insurance is a contract between an insurer and a policyholder, whereby the insurer agrees to pay a sum of money to the policyholder if a speci­fied event happens within a specified period of time.
  • Insurance works on the principle of sharing the losses of a few people through small contributions made by a large number of people.
  • There are two main types of insurance: property and casualty (P&C) and life insurance (“life and pensions”).
  • The main inherent risks of property and casualty insurance are under­writing risk, reserving risk, and claims management risk.
  • The main inherent risks of life and pensions are longevity risk, ...

With Safari, you learn the way you learn best. Get unlimited access to videos, live online training, learning paths, books, interactive tutorials, and more.

Start Free Trial

No credit card required