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Transcript of Methods and Procedures for Risk Profiling Of
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METHODS AND PROCEDURES
ADOPTED FOR RISK
PROFILING OF CUSTOMERS
GROUP 5
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COMPANY PROFILE
IDBI Federal Life Insurance Co Ltd- Joint-venture of IDBIBank, Federal Bank, and Ageas, a multinational insurance giant
based out of Europe.
IDBI Bank owns 48% equity while Federal Bank and Ageas
own 26% equity each
The company offers its services through a vast nationwide
network across the branches of IDBI Bank and Federal Bank inaddition to a sizeable network of advisors and partners.
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Risk Profiling
Method of risk identification and assessment by arranging all
risks in a matrix reflecting frequency, severity, and existing
insurance coverage.
Risk profiling is an amalgamation of the risk taking capacity andthe inherent risk tolerance level.
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DETERMINANTS OF RISK
AGE
INCOME
HABBITS
OCCUPATIONMEDICAL HISTORY
LOCATION
SEX
BODY CONDITION
FAMILY HISTORY
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Risk Profiling Process
A Listing of all risks
Categorizing the risks
Measure exposure to each risk.
Risk Analysis
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A Listing of all risks
FINANCIAL AND NON FINANCIAL RISK
STATIC AND DYNAMIC RISK
FUNDEMENTAL AND PARTICULAR RISK
PURE AND SPECULATIVE RISK
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Categorizing the risks
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Measure exposure to each risk.
MAGNITUDE OF THE RISKS ARE IDENTIFIED
THE IMPACT OF THE RISKS ARE MEASURED
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Risk Analysis
Insurance risk analysis methods are described as follows
Insurance risk factor profiling
Insurance predictive modeling
insurance risk modeling
Insurance scoring
Insurance risk-level classification
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Insurance risk factor profiling
High risk coverage risk factor profiling
An insurance company keeps life insurance records in itsdatabase: gender, age, education, smoking, drinking, sun activity,
height, weight (=obesity level), claim payment, etc., as well as
other contact information. The company wishes to know whichlife insurance groups are at the highest risk, i.e., have the highestclaim ratio.
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THIS IS A POSSIBLE OUTPUT
OF HOTSPOT PROFILING
ANALYSIS
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Insurance predictive modeling
. Predictive models are developed from past historical records
of insurance polices, containing financial, demographic,
psychographic, geographic information, along with properties
of insured objects.
Insurance scoring Insurance risk scoring is numerical rating of insurance policies.
It measures the level of risk of being claimed.
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Insurance Risk level
classificationNumerical Rating System
Standard risk is rated 100.
Favorable factors are assigned negative value called credits.
Unfavorable factors are assigned positive values called debits
Substandard - +100
Standard value - 100
Super standard - -100
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JUDGEMENTAL METHOD
Individual view of experienced professionals like doctors,actuaries, underwriters and others are combined.
No rigid rules and scales are prescribed or followed.
Personal judgment plays a vital role in the whole system of
underwriting. This method is used, where decisions can not be taken based on
numerical rating.
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RISK CRITERIA FOR BASIC UNDERWRITING
OF CUSTOMERS IN IDBI FEDERAL
AGE
1-15 HIGH RISK
15-40 NORMAL RISK
40 AND ABOVE HIGH
STANDARD AGE PROOF
PASSPORT
PANCARD
VOTER ID
OCCUPATION
GENDER
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MEDICAL TEST
UPTO 15 LAKHS NO MEDICAL IS REQUIRED IN
IDBI
DEPEND UPON AGE AND SUM ASSURED THE NEED
FOR MEDICAL IS DETERMINED
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