Portfolio control and risk assessment
Portfolio control
As the portfolios of individual companies are usually not large enough to obtain sufficiently clear-cut results for parameters such as occupation, occupational groups orrating, it is necessary to conduct pool assessments. Munich Re has extensive knowledge in this field. Our investigations help actuarial institutes and insurance associations to establish their accounting bases. We also perform portfolio analyses together with our clients in many markets and make the results available to participating companies. This permits accurate and timely identification of any changes in a company's portfolio and of market trends in general and makes it easier to take swift and effective measures to counter such developments. Studies of various primary insurers' portfolios have shown that the loss frequency of two companies operating in the same market can differ by more than 100%. The causes of such variations are not always immediately apparent, and therefore need to be analysed in detail.
Risk assessment
Risk assessment is of paramount importance in risk management. In addition to assessing the medical, occupational and leisure-time risks, it is also vitally important to keep the moral hazard to a minimum. Naturally, a disability benefit can only be applied for by someone with a health impairment. However, the extent of this impairment frequently depends on the subjective perception of individuals and thus also on their attitude and motivation. A significant factor here is just how much protection people enjoy in the case of disability. If there is only a minor difference between a person's income from work and the benefits from state, company or private disability insurance, there will be little motivation to try and find employment. Studies in the USA bear this out: if the level of benefits is over 70% of a person's last income, claims expectancy rises significantly.
The most important aspect of risk assessment is to ensure that the assessment bases are continuously adjusted inline with medical advances and changing lifestyles. For example, the increasing effects of obesity and high blood pressure as a result of disease or changes in lifestyle are difficult to assess objectively. Through MIRA, Munich Re offers an internet-based underwriting tool which rises to this challenge and takes account of all current developments. We have also compiled a new model application questionnaire which incorporates the above-mentioned changes.