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ESG Funds and its impact

ESGE: EnvironmentalS: Social responsibilityG: Corporate governanceUsually an investor looks at financial parameters before investing in any company but now they started looking at non-financial parameters associated with climate, environment which drives their decision to invest in a particular company or not.There are 3 parameters that investor look for:Environmental·In this decade there has been an increase in average global temperature, rivers getting polluted and deforestation rising causing huge problems for the upcoming generation·So investors want to invest in companies those are switching to renewable resources, improves their waste management practices, or curbing their emission levels.Social responsibility·Companies should handle the resources in an optimal manner where they work. The concept simply is that If you are taking from environment or society, you have to give them back·Companies should not involve in any activity that cause harm to natural environment·In India, i…
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Do you know the types of risk faced by a General Insurance company ?

Better to understand some types of General Insurance product first.
Third party Insurance ( You are driving a car and caused an accident then third party will be indemnified)Aviation insurance ( related to Aeroplanes)Marine Insurance ( related to ships)Travel Insurance ( related to your travel journey)Cyber Risk Insurance (related to cyber attacks)Commercial property insurance (related to Fire in the house or any damage)Contents insurance (related to moveable property such as contents in your house : theft risk)and many more................
Some of the specific risks we are discussing today:
Motor Insurance
Claim frequencies being higher than expected Society becoming more aware about claiming under insurance so they are now more litigousRainy season which caused a lot of motor accidentFlood, storms, riotsor your Policy document wording is loose that you (i.e. Insurer) has to pay claims that you has not intend to do. (So, what happens is that you created a document regarding terms and con…

Why Reserving is so important ?

It is believed by many that insurers make profit from the difference between the money they receive in premiums, and the money they pay in claims.
This is true, but it is not the primary source of income for insurers, which perhaps causes the misguided notion that insurers make millions (and billions) of dollars in profit, at the expense of those people whose claims are denied.

Insurers are very liquid (or cash rich) businesses, owing to the regular volumes of cash they receive for policies they underwrite. Insurers then have to set aside some of this money to pay claims, the minimum amounts of which are set by law. This is called 'regulatory capital'. The rest they invest and that is the primary source of an insurer's income.

If reserves are set too high then too much regulatory capital is held up and this reduces the insurer's investment capital and their ability to make money. If reserves are set too low, then insurers may not be able to meet their regulatory capital r…

General Insurance Workshop Structure in detail?

General Insurance Actuarial Syllabus updated as of September 2020:
This workshop comprises of Pricing, Reserving, Solvency of General Insurance, 6 days course
1. Modelling of Solvency I Excel based modelling on how to find RSM i.e. Required solvency MarginAssessment will be conducted2. Modelling of Reserves  Excel based modelling based on two methods i.e. Chain ladder and Bornhuetter Ferguson methodWe will cover more practical aspects of both methods such as where they are useful and where not and how actuary uses his/her judgementAssessment will be conducted3. Modelling of Pricing Here will pick the data from Motor Road accidents in India as per report by Government of India on the basis of that we will try to find the likelihood of motor accidents across various states of India and how it will impact our pricing4. General Insurance Handbook for Interview preparation for technical rounds (we will give you that handbook as a complimentary gift and it contains all the answers to following t…

Life Insurance Workshop Structure in detail

Life Insurance Syllabus updated as of September 2020:
1. Training on Solvency II Presentation basedCover all three pillars2. Modelling of Life Insurance Reserving exercise Perform Excel based modelling of Life insurance product that provides death, retirement and interval benefits3. Assessment of Modelling exercise A test will be conducted where the student has to prepare his own tool based on the data that we provide and then results will be checked4. Investment Analysis of Insurance product Excel based modellingIRR and feasibility of other better investment options will be analysed based on Investment model

5. Life Insurance Handbook will be given for lifetime consists of 11 articles based on: Life Insurance products in detailComplex products not mentioned in CT Series booksProfit testing, Profit signature6. Probability distribution for the following in layman terms: UniformBernoulliBinomialPoissonGeometricNegative BinomialHyper geometricGammaExponentialBetaTChi-SquareFWeibullParetoNormalSt…

Can you explain Duration in layman terms?

Duration is one of the favourite question of an interviewer.

Simple answer:

Sensitivity in your portfolio value with respect to changes in your interest rate is called as Duration.

For ex: If i say that Duration of my portfolio is 5, then it means if i decrease 1% interest rate then there will be 5% increase in my portfolio value.

Now you will think how can you say whether portfolio value will increase or decrease

Ans: Simple point is that your portfolio value is the discounted value of your future cashflows.

X = y/(1+i)

so if you decrease your interest rate in this equation then the value of X will increase. Isn't it?Follow us on Linkedin: Actuary SenseFollow us on Instagram: Actuary Sense

Application Use: An actuary will want to know how much volatile his portfolio is due to interest rate because he has to match those assets with the liabilities. Assets and Liabilities are both present value of future cashflows in an insurance company while doing actuarial valuation. So it can b…

Do you know the types of risk faced by a Life Insurance company ?

Hey GuysIf interviewer ask any case study question or any situation based question then try to role play that situation in your mind and then try to answer that question.
Risks: We can divide it into various types such asMarket risksCredit risksLiquidity risksOperational risksBusiness risksExternal risksIt will be quite theoretical but i will focus on some main risks for you guys in a layman terms.
Mortality risk: It is the risk of policyholder dying earlier than expected or more deaths occurred in a portfolio than expected.It will be a risk or not depends on the product that we as an insurer are selling into the marketFor ex, HDFC life insurance sells term assurance policy where the payout is based on the death of the policyholder within a given time.So, in this case company has a mortality risk that if policyholder dies within that period they have to pay the money
  Longevity risk: It is the risk of policyholder dying later than expectedIt will be a risk or not depends on the product t…