20 years: CA & educator
In this video Ted outlines how insurance companies are funded and how that capital is then regulated, including outlining key points of the Solvency II framework. Finally he outlines how insurance companies can prevent liquidity risk which could prevent it from paying out claims.
In this video Ted outlines how insurance companies are funded and how that capital is then regulated, including outlining key points of the Solvency II framework. Finally he outlines how insurance companies can prevent liquidity risk which could prevent it from paying out claims.
6 mins 7 secs
Insurance companies use equity to fund their business – providing a ‘cushion’ to absorb any losses that might be incurred on contracts. Regulatory focus is therefore around solvency rather than liquidity. Insurance companies further manage their exposure to risk by taking out reinsurance contracts. Credit rating agencies provide an independent assessment of the strength of individual companies.
Key learning objectives:
Understand how insurance companies are funded
Understand the role of the regulators
Identify whether an insurance company faces liquidity risks
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09:51