Is catastrophe cover also used for Individual Life business? In part (ii) the solution says "Since the direct writer will be keeping some of the risk, it will still want to reduce its expected claims experience and volatility as much it is cost effective to do so. If the treaty contains a profit sharing clause, this becomes even more important". My questions based on the part (ii) statement. Would the underwriting process decline cover or claims at claims stage to reduce claims experience? How would the volatility be reduced? Why would it be more important with a profit sharing clause? How would profit sharing work, share of total profits or just mortality profits? Please advise.
