Insurance Risk in Risk Management

Insurance risk is the potential failure of insurance companies to meet obligations to policyholders as a result of the inadequacy of the selection process of risk (underwriting), the determination of premiums (pricing), the use of reinsurance and / or handling of claims.From some of the references in determining insurance risk. Insurance companies divide the types of risks covered by life insurance companies consisting of mortality, morbidita, and longevita.
 a. Mortality risk.Payment of benefits of the product to bear the risk of mortality based on the death of the insured. Mortality rate is relatively stable over time, thus reducing the financial risk for the company. Mortality risk generally have low default risk.
 b. Risk Morbidita.Payment of benefits of the product to bear the risk morbidita done as a result of disability, pain and or suffering from critical illness (such as cancer and heart disease). Morbidita risk tends to be more variable over time than the risk of mortality. In addition, the benefits pembayaraan morbidita depends on a clear definition of the onset time of the incident morbidita. Thus the risk of congenital morbidita have a higher risk than the risk of mortality.

 c. Risk Longevita.Products that bear the risk longevita provide payment of benefits in the form of a lifetime annuity. Products that provide a lifetime annuity benefits had the highest risk of default.

Furthermore, in assessing the insurance risk is also considered the type of product to be marketed which traditional insurance products.Traditional insurance, death insurance include term (term insurance), endowment insurance (endowment), dual-purpose combination (endowment combine) and life insurance (whole life). Traditional insurance generally has a high risk of default is higher because:Level premium term insurance product remains during the coverage period in accordance with the age of the insured at the time of entry coverage, regardless of claims experience.
 Product life insurance, endowment and endowment combination has a combination package of risk insurance and savings and promising payment of benefits at the time of redemption and maturity. The dominant form of risk management assets and liabilities (asset and liability management).