Allocation of Surplus to individual lines

Sebastian Tan ( (no email) )
Fri, 19 Jun 1998 12:44:35 +0800

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It is common for actuaries to price their products to achieve a =
particular return on equity (or surplus). However this requires a =
notional allocation of surplus to individual lines of business. This is =
still a controversial topic. It would be interesting to know what is =
currently practised in the insurance industries in the USA, UK, Canada =
and Australia. If you are currently involved in premium rating, I hope =
you would share your experiences:

Do you use a simple approach (in proportion to premiums or reserves) in =
the allocation process or do you use something along the lines of =
Risk-Based capital or some other approach?=20

Thanks in advance,

Sebastian

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It is common for actuaries to price =their=20products to achieve a particular return on equity (or surplus). However =this=20requires a notional allocation of surplus to individual lines of =business. This=20is still a controversial topic. It would be interesting to know what is=20currently practised in the insurance industries in the USA, UK, Canada =and=20Australia. If you are currently involved in premium rating, I hope you =would=20share your experiences:
 
Do you use a simple approach (in =proportion to=20premiums or reserves) in the allocation process or do you use something =along=20the lines of Risk-Based capital or some other approach?
 
Thanks in advance,
 
Sebastian
 
 
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