As answers to these questions become clear, an underwriter and field staff can begin to communicate with agents and influence the agent/company relationship in new ways. The underwriting department can work with actuaries to shape tiers and rating structures in order to manage the company’s aggregate risk/premium relationship actively. As shown in Figure 4, over time the aggregate portfolio of risks and premiums which the insurer has accepted will shift to a more favorable relationship.
Figure 4: Optimization & Risk Portfolio Management
OPTIMIZATION & RISK PORTFOLIO MANAGEMENT
RISK PORTFOLIO A
RISK PORTFOLIO B
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