Page 154 - Risk Management in current scenario

and remain in the business, the insurance companies have to manage
this risk while doing the business of life insurance.

There are different tools and techniques have been developed in all these
years to manage this mortality risk. Such risk management tools are
discussed in this write-up.

Insurance companies for many years are using Underwriting and Claim
management as a part of mortality risk mitigation plan. Underwriting is
used as a tool to select the lives that is conforming the pricing
assumptions used by the actuaries and reducing the anti-selection risk.
Claim management used as another tool so that the information given
by the applicant in the proposal form is what they actually represent.
Claim management also used to detect the cause of death claims and
any possibility of the fraud that may happen.

The idea of both claim management and underwriting is to protect the
company from unnecessary leakages. With So many failures of financial
institutions including banks and insurance companies, Enterprise Risk
Management has taken up a bigger role where risk management is integrated
across the Company.

The underlying philosophy of the enterprise risk management is to reduce
the uncertainties of outcome so that value to the organization is added.
The outcome for the insurance companies is profitable growth and
Customer Satisfaction.

Profitable growth

Like any other business, shareholders place their money to earn profit
through creating value for the customers meeting their objectives. In the
insurance business, following factors are the key levers of the profit and
we shall see what are the key risks impacting these levels that may deter
achieve profit.

152 | Risk Management in Current Scenario