Page 153 - Risk Management in current scenario

Underwriting and Claims

Management: A Risk Mitigation

Tool for Mortality Risk

This talk was presented in the Claims and Underwriting

Conference, 2017 Organized by Inventicon held on 20th
September 2017 at Holiday Inn Mumbai International
Airport

Introduction

In the life insurance sector, the key business is replacement of earning
of the breadwinner in the family in case he or she do not survive till his
gainfully employment period. So here the customer has passed his risk
to the insurance company. This means that insurance companies take this
risk from the customer of early death and manage this risk by pooling
all eligible lives together and pay the death benefit out of the money
collected by this pool of lives.

While charging the premium from the customer taking these risks
anticipate certain number of deaths during the term of the contract.
These numbers of deaths are priced in the product. However, if the actual
number of deaths turns out to be more than what they had anticipated,
there will be loss to the insurance companies. This risk to the insurance
company is called Mortality risk. That is, risk of more number of deaths
that what was expected at the time of pricing. So to become profitable

Risk Management in Current Scenario | 151