A Word from the Other Side
by Kendra Felisky-Watson

LONDON, Eng.- Actuaries here are still recovering from the set-up of Equitas, the reinsurance company established by Lloyd’s to reinsure the 1992 and prior liabilities of its syndicates. At the same time, people are gearing up for this year-end where it appears that actuaries will continue to play a high profile role in the loss reserving process.

In the U.K., actuarial certification of loss reserves has not been required by any regulatory body. However, the Institute of Actuaries has been trying to raise the awareness of the value of actuaries in the regulation process. It as helped that the New York Insurance Department now requires that actuaries certify the reserves of Lloyd’s syndicates writing business in the U.S., and the Institute has been working with Lloyd’s to produce standards for these required opinions. Many actuaries hope that Lloyd’s will introduce actuarial certification for all syndicates writing business through Lloyd’s.

Lloyd’s itself has seen the need for tighter regulation of its members and syndicates, and has just begun reviewing its regulatory process. Members of the regulatory review group will compare arrangements at Lloyd’s with those of other relevant regulatory bodies, and will also consider external perceptions of Lloyd’s regulations and their effect on the reputation and standing of Lloyd’s in general. Actuaries here hope that their valuable opinions will be recognized not only in assessing the loss reserves, but also in the setting of premium rates.

In October, the General Insurance Study Group (GISG), the annual gathering of U.K. actuaries, met in the heart of Stratford-upon-Avon. Just to illustrate the incredible growth of the general insurance. actuarial profession in the U.K., this group has grown from 120 actuaries in 1993 (my first year of attendance) to over 300 attendees in 1996. Of course there was a sprinkling of actuaries from outside the U.K., including CAS President Robert A. Anker. In the time-honored tradition of the GISG, much discussion of the presentations took place both in the meeting rooms and particularly in the pubs afterward. An outing to the famous Warwick Castle was enjoyed by all, along with a song-and-dance retrospective of past GISG's written and performed by the actuaries involved (piano accompaniment provided by our own CAS Fellow, David Skurnick).

Regulation was the hot topic at this year's GISG with much discussion about he proposed statutory reserve reports and opinions. Other areas of discussion were: Stochastic Asset Liability Modeling, General Insurance Stochastic Model Office (GISMO), the Future of the Motor Insurance Market, Pricing in the London Market, Reinsurance Security and Ways to Improve the Link Between Actuarial Analysis and Decision Making. Additional topics were: Equalization Reserves, Asset Liability Modeling, Shareholder Value in Insurance Companies, Current Developments in Lloyd's, Lloyd's Corporate Capital, Catastrophe Modeling, Neural Networks versus GLM in Pricing General Insurance, and An Underwriter's View of Stress. Copies of the papers discussed are available from the Institute of Actuaries.

The London Market Actuaries Group continues to need and discuss current issues affecting our actuarial work. Recent topics include catastrophe modeling, non-triangulation reserving, actuaries and the Internet, and the organization of an actuarial department.

Kendra Flisky-Watson, ACAS, is a principal with Lane Clark & Peacock in London, England.