ECONOMICS AND FINANCE OF INSURANCE COMPANIES
- Overview
- Assessment methods
- Learning objectives
- Contents
- Full programme
- Teaching methods
- Contacts/Info
There are no prerequisites. However, an understanding of the contents of the course is facilitated by a good basic knowledge of the economics of financial intermediaries and mathematical methods of financial markets.
The exam is oral and involves the verification of learning on both parts of the course. When remote exams are scheduled, the final exam will be carried out on Teams. The exam will be considered passed with a minimum score of 18/30 on each of the two parts in which the course is divided; therefore, failure in one of the two parts leads to failure of the exam; The final grade, expressed in thirtieths, will be given by the arithmetic average of the sufficient marks obtained in each of the two parts. The Commission reserves the right to award honors if the student provides exhaustive answers that demonstrate high analytical skills and critical sense. For the first part, the student will have to demonstrate that he/she has achieved the "expected learning outcomes" with reference to the "contents" of the first part of the course. In particular, the teacher positively evaluates: the ability to discursively organize knowledge; the ability to reason critically on the study carried out and the depth of the analysis; the quality of the exposure; competence in the use of specialized vocabulary; the effectiveness and linearity of argumentation. For the second part: the student will have to discuss the development of the case studies, illustrating the analyses and calculations carried out. At the end of the course, the teacher will assign students three case studies, related to the main topics covered in the lectures. The following will be evaluated: the ability to contextualize the models and methodologies learned; the quality of the presentation, including the ownership of the specialized lexicon; the depth of analysis and the ability to reason critically. Students, for the purpose of taking the exam, can also take advantage of the intermediate tests provided for in the teaching calendar of the second semester; the first mid-term test (in written form) will focus on the first part of the course (Prof. Corinti) and the second mid-term test will focus on the second part of the course (Prof. Redaelli). Students will be able to access the second intermediate test if they have obtained a sufficient evaluation in the first intermediate test. If the outcome of the intermediate tests is insufficient, the exam will be taken as a whole by the student in the normal exam sessions.
The goal of the course is to provide knowledge and skills on insurance companies management and risk assessment related to the specific features of the insurance business. The course is divided into two parts dedicated, one to management issues and, the other, to quantitative issues related to risk assessment. In particular, the first part of the course (20 hours - Prof. Corinti) aims to provide knowledge on management topics of insurance companies, the conditions of solvency and financial equilibrium, the structure of the insurance market. The second part of the course (20 hours - Prof. Redaelli) aims to provide methodologies and quantitative tools underlying the definition of the solvency balance-sheet and the risk management of an insurance company. Issues related to risk governance, the definition of the Risk Appetite Framework (RAF) and the Own Risk and Solvency Assessment (ORSA) will be discussed. These topics will be explored, in particular, with reference to market and counterparty risks, liquidity risk, climate and environmental risks. The analysis will also take into account the impacts on the risk profile of the accounting standards adopted for solvency reporting.
At the end of the course students will have acquired technical terminology and will be able to argue in an analytical and critical way the topics covered in the two parts of the course. Especially, they:
- will have understood and will be able to argue the fundamental and specific issues of the management of an insurance company and the impacts in terms of profitability, risk and solvency;
- will be able to interpret the evolution and innovations of the insurance sector.
- will have understood the structure of the solvency regime and the risk control and management system in an insurance company.
- will be able to measure the risk profile and capital requirement of an insurance undertaking in relation to market, liquidity and counterparty risks.
- will be able to set the calculation of Risk Tolerance in line with the regulation of the insurance sector.
The course is divided into two parts.
FIRST PART - Prof. Corinti:
1. Specific risks of an insurance company and the insurance process.
2. Management profiles of insurance companies.
3. Prudential regulation of insurance undertakings: solvency conditions and financial equilibrium.
4. Structure of the insurance market: insurance companies, distribution channels.
SECOND PART (Prof. Redaelli)
1. The risk control and management system in an insurance company [4 hours]: a. Risk governance in insurance companies.
b. The risk management process.
c. The ORSA process.
2. From statutory financial statements to solvency balance sheet [3 hours].
3. Market, liquidity and counterparty risks [6 hours]:
a. Definition and identification of risks.
b. Risk measurement tools and models.
4. The risk profile [5 hours]:
a. Definition and calculation of the risk profile;
b. Definition and calculation of Risk Tolerance.
5. Outline of climate and environmental risks [2 hours].
See "Content"
For the first part, the teaching methods are divided into lectures enriched by any operational lessons. Students will actively participate in teaching, discussing during the lessons the materials covered by the exam program. Lectures allow direct interaction with students, who, following the teacher's explanation, can ask questions and in turn be solicited on specific cases and issues. Any testimonies made in seminar meetings serve to create contact with operational realities capable of offering technical and practical updates on the topics covered by the course, as well as food for thought for the solution of operational problems. For the second part, the course is divided into: a) Lectures illustrating the theoretical aspects. Lectures allow direct interaction with students, thus allowing them to verify their understanding of the topics covered and clarify any doubts that may arise during the teacher's explanations. b) Practical applications / case studies. At the end of the theoretical presentation of each topic, business cases will be described in which the theoretical models illustrated are applied. The goal is to explain to students how to set up and solve concrete problems, using what they have studied from a theoretical point of view. The case studies will be carried out with the support of excel files preset by the teacher, in which students will learn how to organize data and information, set up calculations parametrically and carry out sensitivity analysis. c) Exercises (supplementary teaching). The exercises allow the in-depth study of some topics covered by the exam. In the second part of the course, 8 hours of exercises are planned with the aim of deepening from an operational point of view: models and techniques of technical-insurance risk management, Asset & Liability Management, ORSA Process, Product Governance & Value for Money. The active involvement of students in carrying out case studies will allow them, also thanks to the intervention of financial market operators, to deepen their data analysis and critical reasoning skills. d) Seminar meetings and off-site teaching activities. These activities facilitate the development of transversal skills and allow contact with operational realities capable of offering technical and practical updates on the topics covered by the course. Information on how to carry out these activities is provided on the e-learning page of the course.
Refer to the e-learning page of the course.
The office hours are indicated on the professors' web page on the University website.