2006 Spring Meeting Audio Recorded Sessions

Select Spring Meeting concurrent sessions were recorded as either MP3 audio files or narrated PowerPoint presentations. Please listen and tell us what you think.

A complete listing of meeting handouts are also available online.

* Handouts without audio accompaniment.

Sessions Recorded as MP3 Audio Files

Should There Be a National Catastrophe Pool?
Download Audio Recording MP3
Download Handout*

The costly and devastating hurricanes of 2004 and 2005 have prompted some major insurers and government officials to propose significantly different involvement of state and federal government for funding catastrophic losses. The concept is that major natural disasters - Katrina-size hurricanes or severe earthquakes - are essentially uninsurable or not efficiently insurable by the private insurance/reinsurance market. The structure of government involvement might be a network of state or regional catastrophe funds that provide a financial backstop to insurers. Above these funds would be a national catastrophe fund that would collect premium from the state/regional funds and pay losses for the most extreme events.

Some of the incentives presented for this level of government participation in catastrophe insurance are that:

• The likelihood of property/casualty insurance company insolvencies decreases given the greater catastrophe protection - especially for smaller insurers whose risks might be concentrated in one area.
• Left to private insurance alone, some regions are becoming impossible to insure due to the threat of crippling losses from a single natural disaster. A public-sector backstop will decrease this burden and foster the capacity for personal and commercial coverage throughout the country.
• The catastrophe protection offered by this structure could lead eventually to the availability of all-risks policies preventing the financial ruin of insureds lacking flood coverage as exemplified by Katrina's destruction.

But, there are counterarguments to this plan such as:

• Free market economics without undue government intervention has, and will continue to, provide the capital to support insurers and reinsurers. And, an adequate supply of properly rated insurance will follow from the utilization of this capital.
• The government structure relies on subsidy-based funding that will counteract risk management incentives and locating homes and businesses in lower risk areas.
• The spreading of risk is fundamental to insurance. This is accomplished by participation of national and international reinsurers. The state/regional cat funds will confine the coverage afforded to most natural disasters to a relatively small number of participants in one area of the country.

The speakers will present ideas and arguments for and against a public-private partnership structure. Time will be allotted for a question and answer period after the main presentations.

Moderator:
David R. Chernick, Actuary, Milliman, Inc.
Panelists:
Edward T. Collins, Esq., Counsel, Allstate Insurance Company
Mary Z. Seidel, Esq., Vice President & Director of Federal Affairs, Reinsurance Association of America

Why Don't Catastrophe Models Work or Do They?
Download Audio Recording MP3
Download Handout*

The United States has experienced unprecedented catastrophe activity in the last two years. In 2004, we experienced an unusual frequency of hurricanes. 2005 educated us on the severity. As a result, today, insurers and reinsurers are questioning the credibility of the catastrophe models they have been using over the last decade.

Do catastrophe models work? What is in the "black box"? Why didn't we anticipate the 2004 and 2005 events, or were they within the predicted range of the models?

The panel will present the view points from a major modeling firm as well as a user's perspective, and there will be room for questions at the end.

Moderator:


Benoit Carrier, Actuarial Director, Zurich North America
Panelists:
David A. Lalonde, Senior Vice President, AIR Worldwide Corporation
Maria Kovas, Catastrophe Manager, Zurich North America

Session I - Reserve Variability: Where Are We Today?
Download Audio Recording MP3
Download Handout 1*

Download Handout 2*

Current standards of practice regarding best estimates will be discussed. What is a 'best estimate', how is it currently defined, and what do we expect in the near future regarding further guidance? What can and should we do if we were able to develop a typically skewed distribution for a reserve. Finally, we know that other countries are requiring more statistical approaches. We will review requirements and practices regarding distributions outside the US.

Moderator:
TBD
Panelists:
Rodney Kreps, Managing Director, Guy Carpenter & Company, Inc.
Mark Shapland, Actuary, Milliman, Inc.

Session II - Reserve Variability: Who is Doing What?
Download Audio Recording MP3
Download Handout 1*
Download Handout 2*

The panelists will start with a review of the CAS Working Party on Reserve Variability. This report provides a rigorous framing of the core theoretical problem. Although it is quite lengthy, the panel will discuss and classify current approaches. In addition, the panel will discuss approaches for dealing with practical issues assuming that you have developed a distribution. The practical issues include accounting for correlation when aggregating lines of business, how to handle the most recent or very immature exposure periods, dealing with atypical reserves (like mass tort), dealing with tail emergence, and suggestions regarding presentation to management.

Moderator:
TBD


Panelists:
Roger Hayne, Consulting Actuary, Milliman, Inc.
Mark Shapland, Actuary, Milliman, Inc.

Sessions Recorded as Narrated PowerPoint Handouts

D&O Liability: What Happened and What's Ahead
Download Audio Handout 1 PPT
Download Audio Handout 2 PPT
Download Audio Handout 3 PPT

Did premiums decline again in 2005? Did frequency and severity continue their upward trend? Which board members are interested in their D&O coverage and what are they doing about it? Findings from the recently released Tillinghast 2005 D&O Survey will be discussed along with the panel's view on where the D&O market is headed in 2006.

Moderator:
Carl X. Ashenbrenner, Principal & Consulting Actuary, Milliman, Inc.
Panelists:
Vagif Amstislavskiy, Vice President, Zurich North America
Elissa M. Sirovatka, Consulting Actuary, Towers Perrin

Precision Rating---Rating by Address Rather than Territory
Download Audio Handout PPT

Geographic location is an important differentiator of insurance risk. Traditionally, loss and exposure data are aggregated at the zip code level (or some other geographic unit) for the purpose of determining a measure of geographic risk for the zip code. Zip codes with similar loss experience are grouped together to form territories and territorial relativities. Because zip codes are not developed for insurance purposes, the zip codes include risks that are heterogeneous with respect to geographic insurance risk. This heterogeneity can cause inequitable rates and rate discontinuities at the boundaries. Zip codes—and thus boundaries based on zip codes--are further problematic as the US Postal Service can change them frequently.

Given today's technology and data, it may be possible to incorporate geography at a more granular level (e.g., address) and avoid these issues. Of course, to do this it becomes critical to supplement internal data with external data and to use different statistical techniques to more accurately determine the geographic risk. This session with explore the advances possible in precision geographic rating given today's technology, to include a discussion of practical issues such as gaining regulatory approval and implementing the more complex rating schemes.

Moderator/Panelist:
Howard M. Eagelfeld, Actuary, Florida Office of Insurance Regulation
Panelists:
Stephen C. Fiete, Vice President, Aon Re Services
Daniel Finnegan, President, Quality Planning Corporation

What do you think?

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