Hi prashant this side... New business strain can be minimised when following factors come to picture: 1. No initial commission ( high chunk of outflow at time 0) that is sales by own workforce ( distribution channel) 2 no higher supervisory/ solvency reserve ( like low risk term product) 3. Single premium or the very high first premium ( marketing issue) to cover initial expense, then low regular premium. Basically we would want to minimize reserve and outflow at time 0,maximise premium( inflow) . But things like marketing risk, competitive viewpoint, legal and other dimension must be taken care of.

@BluDragonActuarial

24 күн бұрын

@@EduActuary incredible

I'm not completely certain of the answer, but I'll try to explain why the reserve might be negative for the Best Estimate (BE) case. Insurance is typically priced based on the Best Estimate scenario, which includes an element of profit. Therefore, when calculating the BE reserve using the formula (present value of outflows - present value of inflows), the resulting negative amount represents the insurer's profit margin

@BluDragonActuarial

22 күн бұрын

picture perfect

While a single premium policy can potentially reduce or eliminate NB strain due to the large initial premium inflow, the actual impact depends on several factors, including initial expenses, reserve requirements, and the profitability of the policy. For a single premium policy, the reserves are set up based on the present value of future liabilities, which might be substantial. However, since the premium is received upfront, the financial impact might be less severe than in regular premium policies because the regular policy will be on the basis of expected premium inflow vs single premium policy will be on the basis of actual premium inflow.

@BluDragonActuarial

22 күн бұрын

picture perfect