# Risk Management for Enterprises and Individuals, v. 1.0

by Etti Baranoff, Patrick L. Brockett, and Yehuda Kahane

## 8.3 Review and Practice

1. What are the reasons for the high combined ratios of the commercial lines of property/casualty business in 2001?
2. Describe the emerging reinsurance markets. Why are they developing in Bermuda?
3. What is the difference between each of the following?

4. The Happy Life Insurance Company is a stock insurer licensed in a large western state. Its loss reserves are estimated at $9.5 million and its unearned premium reserves at$1.7 million. Other liabilities are valued at $1.3 million. It is a mono-line insurer that has been operating in the state for over twenty years. 1. What concern might the commissioner have if most of Happy Life Insurance Company’s assets are stocks? How might regulation address this concern? 2. If Happy Life Insurance Company fails to meet minimum capital and surplus requirements, what options are available to the commissioner of insurance? How would Happy Life Insurance Company’s policyholders be affected? How would the policyholders of other life insurers in the state be affected? 5. Harry is a risk manager of a global chain of clothing stores. The chain is very successful, with annual revenue of$1 billion in 2001. After the record hurricane seasons of 2004 and 2005, his renewal of insurance coverages became a nightmare. Why was renewal so difficult for him?