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the Design procedure of a tariff but ñòðàõîâàíèè* a financial risk

As the insurance essence is shown in solidary!! rasklam.ke a damage between interested subjects the more subjects participate in safety fund creation, the the smaller insurance instalment they should pay.

Specificity of insurance relations is connected with likelihood character of these relations.

the probability of a damage underlies construction of underwriting rates which are paid by the consumer of fears ³, ¿ h services. Rules ³, but the made accounts on ustanovlennju insurance ³àðèôîâ I supply! Financial soundness [88, with. 65] and competitive! », strahovo ¿! The companies.

in the given paragraph our purpose is account of underwriting rates (data but Republic Tatarstan from 1995 but 2000 of) In insurance of financial risks on the basis of technique Rosstrahnadzora, the analysis of the received results, and also revealing of possible methods of the account of features of insurance of financial risks at account of fears ³, ¿ h tariffs.

so, insurance of financial risks concerns brave kinds of insurance [6]. The concept of mass brave kinds of insurance is entered for the first time by the design procedure of tariffs confirmed of 08/07/1993

According to technique Rosstrahnadzora on risks ³, ¿ m for account of tariffs the certain statistics on this kind of insurance is necessary for kinds of insurance. We are assumed, ÷³î there will be no devastating events, the quantity of agreements with insureds is in advance known.

till 80th years in brave kinds of insurance in domestic insurance the technique of definition of the tariff, known at the beginning of the century was used. However this technique has been focused a pas the most simple, uniform distribution of risk, therefore it has ceased udovlst vorja and, to requirements of practice in a planned economy. Technique Rosstrahnadzora was developed at stability of a time number of indicators of unprofitableness of an insured sum and the expressed tendency to increase or unprofitableness decrease (account is based on construction of the forecast of unprofitableness with use of pair correlation and rectilinear trend extrapolation).

we Will make necessary accounts.

Net-rate Tn consists of two parts - osnovno ¿) parts That and brave extra charge Tr. The basic part net-rate corresponds to the average payments of the insurer depending on probability of approach of insurance event q, average insured sum S and average compensation Sb

we Will consider a design procedure of base tariffs on the basis of data on the insurance market of Republic Tatarstan. The bargains of small volume having high verojatnost of fulfilment are subject to insurance.

basic data for account are collected on the insurance organisations of Republic Tatarstan (on insurance of financial risks chaet insurance of losses owing to infringement of treaty obligations) is resulted in tab. 15.

Table 15

Indicators on the insurance market of Republic Tatarstan for 1995-2000 g l.

2000 Total

the NAME

the INDICATOR

1995

1996

1997

1998

1999

Number of insurance treaties

54

68

77

88

91

Number of agreements on which insurance indemnity payments

1

1

1

3

2

Frequency of risk

0,019

0,015

0.013

0,034

0,022

approaches insurance have been made Events

2

0,029

44 7

00

0.022

Expected indicators for 2001 are resulted in table 16.

Table 16

Expected indicators on insurance of financial risks for 2001

Average frequency of approach of insurance event at financial risk insurance

0

0.025

the Average sum of compensation under the insurance treaty,

530

(thousand rub)

Sb

the Average insured sum under the insurance treaty, thousand rbl.

S

750

the Expected number of insurance treaties

N

90

According to a technique at insurance of financial risks is used a parity of average payment to an average insured sum, not more low 0,7.

the Size of an average insured sum is defined on the basis of the given assurance companies on Republics Tatarstans.

the size of the average eventual loss is calculated but to data of assurance companies of Republic Tatarstan, and in case of their absence by • multiplication of an average insured sum odnoju object of a pas from carrying srodnoj

payments to an average insured sum according to the insurance statistics.

we will carry out account netgo - rates.

the Basic part net - rates That) corresponds to the average payments of the insurer depending og of probability of approach strahovoju of a case q, an average insured sum In and sredneju insurance indemnity Sb. Using the formula, we will receive:

530

' Go = 100 h h 0,025 = 1,77 (rbl. about 100 rbl. of an insured sum)

750

Brave extra charge Tr is entered to consider verojashye excess of quantity of insured accidents concerning them sredne »about significances. Function sh () - factor which depends from garanti safety. Let the assurance company with probability at ~ 0,9 assumes to supply neprevyshenie possible reimbursements before the collected instalments, then from the table to a standard technique« (-1,3. That

corresponds to probability of 10 % of excess of possible reimbursements before the collected instalments.

TR = 1,2 h 1,77 h 1,3 h? 78 h 0,025 = 3,33.

Thus, significance net - rates will be equal:

Ti = That + Tr = 1,77 + 3,33 = 5,1 (rbl. about 100 rbl. of an insured sum)

For a finding gross - rates to net - rate add load. By the form insurance in structure to a tariff it makes 20 % from gross - rates, including: costs for business management - 13 % deductions in fund of precautionary actions - 1 % profit of insurance company - 6 %

Thus, tariff gross - the rate bude t is equal:

5,1

Ti = = 6,38 (rbl. about 100 rbl. of an insured sum)

1-0,2

the Given technique gives as a whole an authentic tariff on brave kinds of insurance. However in a technique peg mentions about the tariff period and a time apportion of a damage, and also the minimum of insurance treaties in an organisation portfolio at which results of accounts are applicable is not designated.

at tariff account it is necessary to remember, that the adequate tariff will be calculated only at the true initial information. In the absence of the authentic statistics tariff account will acquire formal character.

as to tariff account on insurance of financial risks, our legislation does not do distinctions between kinds of risks and requires obligatory fulfilment aktuarnyh accounts at tariff definition, disregarding, that for the majority of financial risks unequivocally representative statistics necessary for objective accounts, cannot be received basically.

Proceeding from essence of financial risks, the majority of financial risks grows out of mutual relations between subjects of risk (the creditor and the borrower, for example), that is arises owing to action so-called «human fak tora».

It is possible to notice, that unlike classical risks (a fire, illness, death), financial risks have no natural stabilizers of level in the form of objectively existing natural and public factors, which action on risk parametres freely from influence of subjects of risk.

thus, the statistics of financial risks by the nature should be diverse and changeable, as is confirmed with all known practice of insurance.

from the point of view aktuarnyh accounts, distinction between classical and financial risks can be presented as follows: Distribution of probabilities of approach of insurance events for classical risks is described normal (gaussovskim) by the law

2

1-X

f () = - e 2 at X ª (-with; +îî),

V2 the l

that is is unimodular.

for financial risks distribution is closer to uniform - 1

With =, at h º (a, b),

R ()

b

About, prih? (And,),

with possibility multimodal ™ and dependence on time (these properties in the formula are not reflected [133, ñ.35].

Absence of natural stabilizers of level of financial risks leads to the property extremely dangerous to insurers

financial risks - change possibilities (more often growth) a risk level after the insurance treaty conclusion.

the given properties of financial risks reduce value

statistical data. Differently, set of insurance parametres of financial risks is especially individual for each insured, characterising features inherent only in it: the kind

activity, its volume, the competitive environment, qualification of the insured, reliability of partners and so forth

In particular, the tariff on insurance of financial risks should be not only a risk level measure as at insurance of classical risks, but also a market price equivalent for granting insurance zanimy to the concrete insured, and also to be individual.

it is necessary to notice, that the similar approach is traditionally applied at insurance of classical risks when the tariff is exposed to correction according to market demands, changes of risk in time. Thus, it is expedient to correct insurance the tariff ³!

estimated by standard, classical techniques, considering specific features of the insured and an equivalent, a market price for insurance protection.

we will allocate the essential moments at account of underwriting rates but to insurance of financial risks: the Insurer should not be adjusted to use a base tariff as a unique objective basis of the underwriting rate under the agreement. tariff Size to choose gju arrangements with the insured in a range which bottom significance is limited by market conditions, and top - optimum reasons above which to the insured is unprofitable to insure risk the Insurer at definition of tariffs should proceed and, from toju what quantitatively to define the tariff as an objective measure of risk, it is impossible.

It is necessary to notice, that the given actions of the insurer ³ I will contain:

the analysis of an initial risk level; The analysis of possibility of minimisation of risk; the analysis of possibility of stabilisation of a risk level; the analysis of a running control of a risk level;

the analysis of possibility of maintenance of obligations of the insured.

it is necessary to recognise, that cost of the analysis and an estimation of financial risks is great. We will address to statistics of credit risks. According to the European bank for Reconstruction and Development for 2000 from 290 predst avlennyh projects was prokreditovano only 32, that makes about 7 % and harakgerizusg quality of projects offered to crediting.

considering rigidity of standards of the European Reconstruction and Development Bank, the similar indicator for domestic credits makes 15 - 25 %. Expenses for average examination on complexity of the project (ODES - 1 million dollars) make, according to experts, approximately 0,3 - 1,5 thousand USD. For this reason for insurers of the extremely actual working out of methods of decrease in expenses of a pas examination of projects is.

Practice of insurance business has shown, that but to each insurance product at assurance companies the list of risk factors and categories of the insured objects, tariffs corresponding to them and conditions of their application is formed. Differently, the system [91 is formed tarifikatsionnaja, with. 153].

Job rating of insurance service - process of definition of set of tariffs and conditions of their application. There are some reasons of necessity of realisation of job rating.

principal causes of necessity of job rating are resulted in the scheme 21.

Economic

(technical)

aspect

Creation tarifikatsionnoj systems supplies safety fund formation in size, sufficient for fulfilment by the insurer of the obligations and supplying the set financial soundness.

Commercial

aspect

As a result of the wrong tariff policy the insurer can select adverse risks for itself (effect antisslsktsii risks), on which probability of approach of insurance event above, than the probability used at account of tariffs.

risk Decrease

to the Insurer is favourable, when the insured carries out the certain precautionary actions reducing risk. In that case the part of risks from a category of the dangerous passes in favorable for the insurer.

the Scheme 21. The reasons of realisation of job rating.

we will allocate construction stages tarifikatsionnoj systems: Account of the base tariff (a base tariff) Definition of risk factors. Application of correction factors, discounts and extra charges. Account of a final tariff.

we Will consider features of job rating on insurance of financial risks. Application of correction factors helps, being based on a base tariff to consider the factors influencing a deviation of risk from average (settlement size).

Discounts and the extra charges represented the insured

In our opinion, on the basis of data of statistics, the discount and the extra charges represented the insured, it is possible to tabulate (tab. 16):

Table 16

Terms of assurance

Skidkm (-),

(_) - in % to the tariff

Repeated insurance

Policies of one assurance company

-5 %

Policies of different assurance companies

-3 %

Policies with insured accident

-

Faultless fulfilment by the client contractual

- 5 %

obligations (availability of credit history)

Single default by the client of treaty obligations

' 20 %

As at an underwriting rate establishment it is necessary to consider extra charges not only specific features of the insured, But also a condition ïîð³ôåëÿ the risks of the insurer which with allowance for are available data under insurance treaties of a financial risk by us the correction factors considering the given factor (tab. 17) are offered.

Table 17

Circumstance

Factor

the Insurer attends to insurance of financial risks the first year.

1.2

In a portfolio of risks of an assurance company is

- * ¦ to 50 insurance treaties financial

• 1.15

risks

to 100 insurance treaties financial

1.1

risks

over 100 insurance treaties of financial risks

1

Factors to the base tariff, applied in zavisimost and from a condition of a portfolio of risks of the insurer

Summarizing the above-stated, it is possible to note the following: We carry out tariff account on insurance of financial risks on the basis of data on the insurance market of Republic Tatarstan. The base tariff settled up by technique Rosstrahnadzora. 1 ²îëó÷ñííàÿ the tariff is good as base as the applied technique does not consider many factors the insurance treaty-period, a time apportion of a damage, avenue the Base tariff does not solve a problem of an individualization of the tariff and not uchityvae t sos tojanie ³ jur ³ felja risks of the insurer. Essence of financial risks (paragraph 1.3.) Assumes inconstancy of indicators of statistics, and risk distribution can occur not only on the basis of the law of normal (Gaussovsky) distribution, but also on the basis of uniform distribution to possibility of a multimodality and dependence on time. As to a problem of an individualization of the underwriting rate, us it is offered to consider at a choice of a final tariff specific features of the insured - by means of the mechanism of discounts and extra charges and a condition of a portfolio of risks (the concluded agreements) the insurer - applying correction factors.

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A source: TUKMAKOVA DARYA PAVLOVNA. FINANCIAL RISKS And THEIR INSURANCE. The dissertation on competition of a scientific degree of a Cand.Econ.Sci. Kazan - 2002. 2002

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