IV. Core Functions of an Insurance Company 保險公司的主要功能

Product development is the core function through which an insurer turns identified customer needs into a properly priced, compliant and reinsured insurance product, which it then keeps under review and revises after launch. Several departments take part, including marketing, actuarial, underwriting, claims, and legal and compliance.

Customer servicing is all the support an insurer gives its customers over the life of a policy: before the sale, at issue, during the policy term (alterations and renewals), and through claims and complaints. Good service keeps customers, builds reputation and is a basic part of treating customers fairly.

Marketing in an insurance company means finding out what customers need and then using suitable distribution channels and promotional methods to bring the right products to the target market. In Hong Kong this must be done fairly and accurately, either by the insurer itself or through intermediaries licensed by the Insurance Authority.

The sales function gets insurance products to the right customers. An insurer plans its sales using the marketing mix (product, price, place, promotion) and reaches customers through distribution channels such as licensed insurance agents, licensed insurance brokers, direct marketing and bancassurance. Candidates must be clear about whom the intermediary represents in each channel.

Underwriting is the process by which an insurer assesses each risk proposed to it and decides whether to accept it, on what terms and at what premium. It makes sure each insured pays a fair premium for the risk they bring to the common pool, and it guards against anti-selection.

Policy administration is the routine work that keeps a policy running once cover is agreed: issuing documents, recording mid-term changes, collecting premiums, handling renewals, lapses and surrenders, and keeping accurate policy records.

Claims handling is where an insurer keeps its promise. It must pay valid claims promptly, fairly and in the right amount, and decline claims that fall outside the cover or are fraudulent. Candidates need to know the claims procedure, the difference between loss adjusters and loss assessors, the methods of settlement and claims reserves.

Reinsurance is an arrangement in which an insurer (the ceding company) passes part of the risks it has accepted, with a matching share of premium, to a reinsurer. It increases capacity, stabilises results and protects against catastrophes, but the ceding company stays fully liable to its policyholders.

Actuaries use mathematics, statistics and financial theory to measure the financial effect of the risks an insurer takes on. Their main work is pricing, calculating reserves and monitoring solvency. In Hong Kong, the Insurance Ordinance requires every authorised insurer carrying on long term business to appoint an actuary.

The accounting function records premiums, claims and expenses, sets up technical reserves and reports financial information to the Insurance Authority. The investment function puts to work the funds that build up between receiving premiums and paying claims, following the principles of security, liquidity, yield and asset–liability matching. An insurer's overall result is its underwriting result plus its investment income.

Through training and development, an insurance company gives its staff and intermediaries the knowledge, skills and ethical standards their work needs. This improves service quality, keeps the company compliant and builds its future talent. Licensed insurance intermediaries must pass the qualifying examinations and then complete continuing professional development every year.

An authorised insurer must appoint individuals to head its key control functions: risk management, financial control, compliance, internal audit, actuarial and intermediary management. These key persons in control functions need the Insurance Authority's approval before they are appointed, and they must be fit and proper.