Insurance Practices and Risk Control: Issues and Lessons for Property and Liability Insurers

This article presents a comprehensive theoretical framework for property and liability insurance risk management and control mechanisms. It presents the rationale behind property and liability insurances risk control measures. Further the article tries to describe and examine four main categories of property and liability insurance risk management and mitigation strategies / techniques, viz; maintaining the internal capital base, managing the asset risk exposure, managing by underwriting risks, and managing the covariance between asset and liability returns. The securitization of bad assets is specifically projected as a potential method for managing and underwriting risks. Finally, the article ends up with an outline of four key guidelines for the cost-effective and efficient risk management practices in the insurance sector.