PINS S4.7 Risk management policy — pricing risk

(1) An insurer's risk management policy for pricing risk should include:
(a) clearly defined and appropriate levels of delegation for approval of all material aspects of pricing;
(b) a process for the reflection of emerging experience in price adjustments;
(c) profit-loss analysis, including monitoring the effect of price movements;
(d) price discounting authorities;
(e) a process for the insurer's product pricing to respond to competitive and other external environmental pressures;
(f) a process for monitoring, and the ability to monitor, deviations of actual price from the technical underwriting pricing;
(g) methods for monitoring compliance with pricing policies and procedures for proposed pricing variations; and
(h) the relationship between pricing, product development and investment management so that they are appropriately aligned.
(2) The Regulatory Authority expects insurers to consider doing the following in relation to pricing insurance products:
(a) incorporating ongoing actuarial review of, and actuarial involvement in, the pricing process;
(b) undertaking independent reviews of:
(i) pricing for schemes; and
(ii) pricing for larger or more complex risks.
Inserted by QFCRA RM/2013-1 and amended by Editorial changes (as from 1st January 2015).