define risk management (auto insurance)?
The process of avoiding, eliminating, transferring or reducing the consequences of a loss. Insurance is just one element of risk mgt. You could choose to buy a vehicle tracker…this will reduce the risk of the car being stolen and not being recovered.
An underwriter's use of actuarial data used to assign premium to any given individual (insured) based on a combination of risk factors.
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Okay, each company is different. At my company we have something called SRM, which means Strategic Risk Management. For homeowners and auto owners, depending on the area, can be some risky business. Lets turn the tables:
If YOU were an insurance company and you had to insure the country, what risks is your house at with an everyday lifestyle?
(this would be like Fire, theft, vandalism, water damage, wind and hail, etc) Same thing with AUTO ins. Your car is at risk of being hit, stolen, broken glass, cosmetic issues, etc
The insurance company has a stability score, which is called "Standards and Poors" each company has financial strength, the longer they have been around, the longer they will last. the more financially sound the company, the better and faster claims get paid.
Insurance companies are trying to limit where they write new policies, to make sure they dont go bankrupt.
They will look at your credit (why? cuz people with bad credit have a habit of making more claims, which costs the company more money), and they look at how many c laims you have made in the last 5 years (to find your pattern) and will look at your prior insurance (too see if you have good habits)
(would you tell your best friend you would pay out the car damages to his car if he crashes it, and you know he has had 2 at fault accidents and 3 speeding tickets? didnt think so)
The reason why your premiums will end up what they end up at is based on YOU. Say you pay 1 thousand or 2 thousand a year, but if ANYTHING happens to the car or if someone were to sue you the ins company can easily pay out 100,000. The insurance company is not making any money off of you, they arent even close to it, but each company is different.
risk management is how a specific company manages their risk financially based off credit driving history and your prior insurance (and how long you have held your license) theyre trying to find out how much you could end up COSTING their company in a loss
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Im an agent
The process of avoiding, eliminating, transferring or reducing the consequences of a loss. Insurance is just one element of risk mgt. You could choose to buy a vehicle tracker…this will reduce the risk of the car being stolen and not being recovered.
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To identify possible causes of loss, and decide how to deal with them.
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agent, 20+ years