Insurance Companies and Pension Plans (FRM Part 1 2025 – Book 3 – Chapter 2)

Understand how insurance companies and pension plans work in the FRM Part 1 curriculum. This lesson covers the key features of insurance companies, mortality tables, premium calculations, ratios, moral hazard, adverse selection, and defined benefit vs. defined contribution plans. Each concept is explained clearly with relatable examples to help you master Book 3, Chapter 2 of the Financial Markets and Products module. For FRM (Part I & Part II) video lessons, study notes, question banks, mock exams, and formula sheets covering all chapters of the FRM syllabus, click on the following link: https://analystprep.com/shop/unlimite... AnalystPrep is a GARP-Approved Exam Preparation Provider for FRM Exams After completing this reading, you should be able to: Describe the key features of the various categories of insurance companies and identify the risks facing insurance companies. Describe the use of mortality tables and calculate the premium payment for a policyholder. Calculate and interpret loss ratio, expense ratio, combined ratio, and operating ratio for a property-casualty insurance company. Describe moral hazard and adverse selection risks facing insurance companies, provide examples of each, and describe how to overcome the problems. Distinguish between mortality risk and longevity risk and describe how to hedge these risks. Evaluate the capital requirements for life insurance and property-casualty insurance companies. Compare the guaranty system and the regulatory requirements for insurance companies with those for banks. Describe a defined benefit plan and a defined contribution plan for a pension fund and explain the differences between them. #FRM #FRMPart1 #FinancialRiskManager #GARP #Insurance #PensionPlans #RiskManagement #AnalystPrep #FinanceEducation #ExamPrep