2001 JOINT GIRO/CAS CONVENTIONSeminar on Globalization and Technology Session Descriptions |
| General Session: Fair Value Accounting for Insurance |
| Accounting standards setters worldwide are considering new treatments
for
insurance contracts that could lead to sweeping changes in insurer
financial
statements. The Insurance Contracts project of the IASB is
considering fair
value as a possible basis for insurance accounting. The FASB's
Concept
Statement 7 adopts fair value as the preferred basis for future
accounting
pronouncements on financial instruments including insurance contracts.
Definitions of fair value and of a related concept known as
entity-specific
value are still in flux, but potential changes to insurer financial
statements include elimination of the deferral and matching concept
underlying current income statements and incorporation of an insurer's
own
credit standing in the valuation of its liabilities. In turn, such
changes
would affect the evaluation of insurer financial statements by
investors,
regulators, rating agencies, and policyholders.
This session will bring attendees up-to-date on the current status of
the
discussion on fair value. Included will be a review of the CAS White
Paper
on Fair Valuing Liabilities and of AAA letters to the FASB and the
IASB.
Also included will be discussion of continuing work by the CAS and of
what
might be expected to happen in the ongoing accounting standards
development
process. Importantly, attendees will also receive an overview of EU
and UK
efforts in these areas. The EU is considering adoption of IASB
standards
for 2005 financial reporting.
Panelists: |
| Session 1: Customer Relationship Management Strategy |
| CANCELLED |
| Session 2: Designing Business Intelligence Applications for Insurance Executives |
|
Over the last decade, traditional data warehousing has been construed to be a poor investment, by and large due to the time and cost of implementation. This assessment has prompted the move toward pre-packaged data warehousing techniques and finely tuned analytic applications, not only in insurance, but across all spectrums of business. This panel will show how insurers can gain efficiencies, reduce risk, and gain speed in their support decision processes, more economically. The panelists will also discuss the most recent trends in analytic applications, including how insurers are receiving business intelligence value through web-based and ASP solutions.
Moderator/Panelist: |
| Session 3: DFA and "DFA lite": Current Events on the Integrated Modeling Front |
|
In the mid 1990's the idea of a "Dynamic Financial Analysis" model burst upon the U.S. property/casualty insurance scene. Many papers and much research have been done since then. Over the years, the nature of the papers and research has turned from the theoretical "one ought to do X" to the more tangible "company XYZ has used a model to analyze their reinsurance structure / capital usage / asset allocation structure / business plan / etc." At the same time, practitioners have realized that the promise of DFA as the ultimate modeling tool may have been a bit of overstatement. This has led to the development of "DFA-lite" applications -- applications that do some of the same things that enterprise wide DFA models do, but on a smaller, more focused scale.
The first presentation will illustrate a full-scope DFA model case study. The Casualty Actuarial Society "created" a hypothetical insurance company as a common base to compare DFA applications. This presentation will use a DFA approach to determine how to allocate the company cost of capital to business units. The allocation procedure will be based upon the Shapley Value, an allocation process developed from game theory. The risk metric will be the Tail Conditional Expectation (sometimes referred to as Tail Value at Risk), a risk metric consistent with the axioms of coherent risk measures. The cost of capital allocation will be compared to more traditional metrics. The second presentation will provide two case studies in which DFA lite models have been used to enhance the informational content of the actuarial analysis. The first case study will use a simulation based model that focuses on reinsurance coverage to evaluate the cost / benefit tradeoff of several reinsurance alternatives. The second case study will use a simulation based model focusing on reserve projections to explore the similarities and differences achieved through standard actuarial reserving techniques versus a simulation based approach. Panelists: |
| Session 4: Enterprise Risk Management (ERM) - An Actuarial Evolution |
| CANCELLED |
| Session 5: Captives and Role of Actuary |
|
Captives are growing more and more importantly in today's increasingly sophisticated financial world. This session will discuss the benefits of setting up a captive and compare the regulations for the more popular domicile locations. Captive insurers are also assuming a larger role in the Enterprise Risk Management (ERM) of large corporations. The unique risks that are being ceded to captives will be discussed along with a discussion of the fronting insurance market.
This session will present the unique but important role for actuaries in the captive insurer market. In addition to the traditional roles such as regulatory support, reserve studies and actuarial opinions, actuaries play an important role in less traditional roles such as ERM, feasibility studies, asset/liability management, financial projections and tax analyses. The session will progress into more in-depth discussion of differences in the actuaries' role in Europe and North America. Panelists: |
| Session 6: Risk Premium Project Report |
|
This session will cover the Risk Premium Project (theoretical) Report prepared for the CAS by Dave Cummins, The Wharton School, Richard D.Phillips, Georgia State University, Bob Butsic, Firemans Fund Insurance Company and Richard Derrig, Automobile Insurance Bureau of Massachusetts.
This report (http://casact.org/cotor/rpp) summarizes the authors' review of the actuarial and finance literature on the subject of risk adjustments for discounting liabilities in property-liability insurance. The authors find that the actuarial and financial views of risk priced in the market are converging: systematic, or non-diversifiable, risk still plays a central role in equilibrium pricing, but non-systematic costs arising from market frictions such as taxes and financial risk management also contribute to market valuations. Recent advances in risk assessment and capital allocation techniques are noted. A searchable Web site with an annotated bibliography of the literature is provided. (http://aib.org/rpp/rppsearch.asp) Several empirical follow-up projects were identified in the report. Panelists will present the empirical findings to date (October) from the follow-up empirical studies of cost of capital and allocation of capital. Panelists: |
| Session 7: CAT Modeling in North America |
|
This session will provide an overview of cat modeling in North America, as to generic model design, uses in insurance and reinsurance pricing, and applications to risk management. The session will also touch upon external data bases used in developing catastrophe models, recent developments and ongoing research in catastrophe modeling techniques.
Panelists: |
| Session 8: Insurance E-Business in North America |
|
Many Property & Casualty insurers are currently evaluating the
potential for
e-commerce in insurance. Many are undertaking large projects to
develop and
implement this capability. This is a key strategic area for an
insurer that
impacts products, systems, distribution, customer relationships and
business
strategy.
Actuaries can plan a key role in many aspects of the development of
e-commerce capability. One of the speakers will discuss the approach that a large P&C insurer is taking to develop a business-to-consumer (B-to-C) e-commerce capability. His discussion will highlight the role that an actuary can play in such large projects. In addition to B-to-C strategies, business-to-business applications are evolving in the underwriting and claims handling processes for a business.
Actuaries play an important role in evaluating the effectiveness of
these plans. The second speaker will provide an historical overview of the development of his company's E-Commerce insurance services from "pre-internet" times to today, highlighting the challenges faced along the way. Included in the overview will be a discussion about the increased activity on the part of individual insurers in developing and augmenting their own vertical distribution systems and web-based back offices in order to offer real time financial and underwriting review.
Moderator: Panelists: |
| Session 9 : Emerging Markets |
|
This session will explore issues regarding the entrance in newly emerging markets. Two case studies will be presented. The first speaker will discuss issues related to the Asian markets, and will broadly survey the motivations (of both foreign insurers and Asian governments) underlying the ongoing market deregulation in several countries, the obstacles to foreign entry, and the potential risks that must be considered. The second speaker will discuss issues related to entry into the South America markets. A specific case study regarding financial guarantee coverage in Columbia will be presented.
Panelists: |
| Session 10: Finite Risk Reinsurance |
|
The finite risk market is continually changing, bringing new
challenges and opportunities for those involved. The demand for the products is significantly growing in both the US and abroad as awareness of the products grows, the market hardens and the world moves towards US GAAP accounting. This session will address the expansion of finite reinsurance over the past few years, the current state of the market, including products available and recent trends, as well as the potential future market.
Panelists: |