Subject SP7 Acronyms Parts 1 to 6

Vocabulary-style flashcards decoding the key acronyms and mnemonics for Subject SP7 (General Insurance) across parts 1 through 6.

INNER CRAP (Claims analyses)

Impact / incidence of large claims, New claim types, Nil claims, Expenses vs indemnity cost, Re-opened claims, Changing frequency and severity, Recoveries on gross claims, Assessing concentrations, Partial payments

CRAVE APE (Reinsurance analyses)

Catastrophe reinsurance, Reinstatements, Amount of risk to retain, Value for money, Extent of accumulations, Appropriateness of cover, Profitability of layers, Effects on capital

RICE AD (Investment and capital analyses)

Risk assessment, Investment policy, Capital requirements, Evaluate existing portfolio, Allocate capital between classes, Determine return on capital

PEACE REP (Experience analyses)

Pricing and sales of policies, Environmental changes, Anything else the management require, Claims reserves estimation / claims experience, Expense analysis and allocation, Risk exposure and aggregations, Estimation of claim trends, Policyholder behaviour

BALANCED FLACCID DAFT CRUMB (Reserving uncertainty)

Behaviour of third parties, Amounts of claims, Latent claims, Assumption on distribution, New classes, Catastrophes, Economic conditions, Development patterns, Frequency of claims, Legislation, Area (globalisation), Climate change, Claim handling procedures, Inflation, Demand surge, Distribution channels, Arrangements for profit shares, Format of data, Third party handlers, Competitive pressure, Reserving philosophy, Unusual / large risks, Mix of business, Bodily injury claims

MIS PI PIP (Capital modelling uncertainty)

Model, Incorrect dependencies, Simulation, Programming, Incomplete data, Poor data, Inconsistent data, Parameter

A TAD NOBLE (Expenses uncertainty)

Aggregators, Tax, Accounting changes, Distribution channels, New markets, Off-shoring, Broker power, Levies, Economic conditions

AGE ROT (Investment uncertainty)

Actions by central bank, Globalisation, Economic cycle, Return, Overseas influences, Type of investment

CGI MICE (ROC uncertainty)

Competition, Globalisation, Insurance cycle, Margins on premiums, Investment returns, Claims, Expenses

MR DAMPP (Categories of uncertainty)

Model error, Random error, Data errors, Adjustment factors, Market conditions, Portfolio movements, Parameter error

SAD ADVERT PROMPTS ACIDIC CALM (Examples of regulation)

Solvency level, Amount / type of business written, Disclosure, Auditing, Deposit assets to meet liabilities, Valuation basis (assets and liabilities), Equalisation reserve, Risk-based capital calculations, Type / amount of assets for demonstrating solvency, Publish premiums, Reinsurance requirements, Offer required cover, Mandatory restrictions on cover, Premium rates, Treating customers fairly, Statement of actuarial opinion, Authorisation of companies / agents / management, Cooling off period, Illegal products, Discounting of liabilities, Information used in underwriting, Compensation scheme, Countries where business is written, Anti-competitive behaviour, Levies to consumer protection bodies, Mismatching requirements

CREAM HEMP (Objectives of regulation)

Create liquidity, Reduce transaction costs, Efficiency of the financial system, Allocate resources efficiently, Manage risk, Help growth and competition, Economies of scale in investment, Mobilise long-term savings, Protect policyholders

EPIC BLOC (Disadvantages of regulation)

Economies of scale (fewer), Premiums increased, Investment return lower, Costs, Barriers to entry, Less insurance coverage, Opportunity cost, Complex capital calculations

PASS LIFE (Reasons for purchasing reinsurance)

Profitability (increase), Avoid single large losses, Smooth results, Solvency (improve), Limit exposure to single events or accumulations, Increase capacity to accept risk, Financial assistance, Expertise

CRAFT CRAMPS VENDS DRILLS (Claims characteristics)

Catastrophes, Reporting delays, Accumulations, Frequency, Trends, Currency, Reinsurance, Amount (severity), Moral hazard, Partial payments, Settlement delays, Volatility, Event delays, Nil claims, Definition, Seasonality, Distribution, Reopened claims, Inflation, Latent claims, Large claims, Salvage and subrogation

CRAMPERS (Stakeholders of a general insurance company)

Credit rating agencies, Reinsurers and brokers, Auditors, Management, Policyholders, Employees, Regulators, Shareholders

STILL CUBIC WAGE (External environment)

Seasonality, Technological change, Investment conditions, Latent claims, Legislation, Catastrophes, Underwriting cycle, Behavioural trends, Inflation, Court awards, Weather, Awareness of the ability to claim, Global warming, Exchange rates

MUD PIS (Criteria for an insurable risk)

Moral hazard avoided, Ultimate limit to liability, Data available to assess the risk, Probability of occurrence is low, Independent risks, Similar risks pooled

VENOM ADA (Criteria for an exposure measure)

Verifiable, Easy to obtain, Non-manipulable, Objective, Measurable, Acceptable to the market, Defines the risk, Acceptable to the policyholder

SEMI COMA (Factors affecting data)

Size of company, Existence of legacy systems, Management and staff, Integrity of data systems, Class of business, Organisation (nature of), Method of sale, Age of company

THE SLEET (Generic rating factors)

Term, History, Excess / deductible, Sum insured, Level of cover, Exposure measure, Exclusions, Territory

ADVERSE SUNTAN CORRECTOR (Factors affecting investment strategy)

Accrual of liabilities in the future, Diversification, Valuation requirements, Existing portfolio, Restrictions – statutory / legal / voluntary, Size of the free assets (absolute / relative), Economic outlook, Solvency requirements, Uncertainty of the liabilities, Nature of the liabilities, Tax treatment of the assets / insurer, Availability of assets, Non-investible funds, Currency of the existing liabilities, Other insurers (competition), Risk appetite, Reinsurance, Expenses, Credit rating, Term of the existing liabilities, Objectives, Return (expected long-term)

VAN FUR UP CAVE (Features of a good model)

Valid, Adequately documented, Not overly complex, Flexible, Understandable by managers, Reflect risk profile, Uncertainty should be verifiable, Parameters identified and justified, Complete, Appropriate parameters, Verifiable, Easy to communicate results

SPAR SPA (When to allow for diversification)

Solvency assessment, Performance measurement, Asset allocation, RI purchasing, Strategy setting, Pricing, Assessing enterprise level risks

CLOG RUM (Key risk types)

Credit, Liquidity, Operational, Group, Reserve, Underwriting, Market

REDUCE DOG CRITIC (Assumptions needed for a capital model)

RI share of ultimate claims and RI bad debt, Exhaustion of reinsurance and reinsurer, Downgrade assumptions, Ultimate gross claims (including CHE), Ceded premiums, Expenses, Dividends, Operational losses, Gross written premium, Catastrophe claims, Reserve movements (gross), by COB, Inflation, Tax, Investment returns, split by asset class, Claims payment profiles

CRUDE CALF PUP (Data needed for capital modelling)

Claims payment profiles, RI programmes, Unpaid gross claims, Details of operational risks, Expenses, Credit exposures, Asset values, Large losses, Future reinsurance costs, Planned premiums (gross and net), Unexpired premiums (gross and net), Planned RI programmes

CLUB SIGH (Problems with inwards RI reserving)

Cedants use different reserving bases, Longer reporting delays, Upwards development of claims, Benchmarks less relevant, Sparse data, IT constraints, Grouping of data, Heterogeneous exposure