Insurance Products and Management
Scope
Insurance products and management tests product design, pricing, underwriting, claims, distribution, and performance monitoring. Korean-specific content includes life and non-life product categories, standard terms, sales channels such as 설계사 and GA, and profitability measures.
Core rules
- Product pricing balances expected claims, expenses, risk margin, and profit; the gross premium must fund all of these.
- Life products include death, survival, annuity, and universal/variable designs; non-life includes fire, marine, auto, liability, and health/indemnity.
- Underwriting classifies risk; claims management controls leakage and fraud.
- Persistency, lapse, mortality, morbidity, and expense experience drive profitability.
- Product disclosure and suitability rules apply at the point of sale.
- Management monitors loss ratio, expense ratio, combined ratio, and embedded value.
Worked example
Expected claim cost is KRW 300 per policy. Expenses are 20% of gross premium and the target risk-profit margin is 10% of gross premium. Find the gross premium.
Let P be gross premium. P = 300 + 0.20P + 0.10P, so 0.70P = 300 and P = KRW 428.57. Reasoning: the expense and profit loadings are proportional to premium, so they cannot simply be added as fixed amounts. If expenses were a fixed KRW 60 per policy instead, P = (300+60)/(1-0.10) = KRW 400. The difference shows why the loading basis matters.
Traps
Treating percentage loadings as fixed amounts is a common pricing error. A low loss ratio does not necessarily mean high profit if expenses or reserves are understated. Lapse assumptions can change profitability more than mortality in some products. Do not confuse morbidity (health/disability) with mortality.