CAS Exam 7 Spring 2016, Question 27
Study guide: Exam 9
An insurance company writes predominantly long-tailed lines of business in a highly competitive environment. The company's incentive plan is structured around achieving both top line growth and target calendar year combined ratios. Recently the company has seen a number of accounts go to competitors for lower rates and increased coverage.
Part a (0.25 points)
State a goal of agency theory.
Part b (0.5 points)
In the context of agency theory, discuss the problems this company may be facing.
Part c (0.5 points)
Briefly describe two actions the company could take to implement effective underwriting cycle management.
Answer this question and see the worked solution