Financial burden an anomalous catastrophic event

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Reference no: EM131001897

As our texts indicates, a "loss ratio" can be used to measure an insurer's financial well-being as it reflects the percentage of premiums being used to pay covered losses. Thus, an increasing loss ratio could mean that there is something wrong with performance in the claims department, or that underwriting failed to select policyholders with above-average loss exposures, or that the actuarial department improperly priced the insurance company's products. On the other hand, there have been many catastrophic natural disasters (tornadoes that wipe out entire towns, floods, hurricanes, tsunamis, wildfires that cover 1000's of acres, etc). Imagine you were the CEO of The Best Insurance Company, Inc. Given what you now know about Underwriting, Ratemaking, and Claims, give your opinion about how you would try to handle the financial burden an "anomalous catastrophic event" would place on your company. (Obviously this could be a very long answer so just give one or two short points of what you feel would be your focus or strategy).

Reference no: EM131001897

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