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Actuaries Abroad
A Historic Year Ahead in the U.K. by Kendra M. Felisky-Watson
Historic happenings are underway this year in the U.K. First of all, this is the Jubilee year of Queen Elizabeth II. It has been 50 years since she ascended to the throne and all sorts of celebrations are planned throughout the summer.
Lloyd's Reforms
A package of radical reforms designed to modernize the Lloyd's of London insurance market has been cleared for consideration by the market's ruling body, the Council of Lloyd's. The most important proposal is the elimination of individual Names with their unlimited liability, the three hundred-year-old traditional backbone of Lloyd's capital. The other most interesting reform is the removal of the traditional three-year accounting system in favor of a more familiar one-year accounting system. A summary of the key reforms proposed in the report follows:
- Modernization of the structure. Lloyd's will act as a franchiser in the management of the marketplace, with the managing agents of syndicates as franchisees.
- A change to the way the market reports its results. Lloyd's current three-year accounting system will be replaced by more conventional GAAP accounting.
- A new vehicle for Names to participate in the market after January 2005.
- A transition mechanism to support the above change.
- An end to unlimited liability and the annual venture. No new unlimited liability Names will be accepted, and existing Names who wish to continue underwriting will convert to limited liability by January 2005.
Informal market consultation will now take place over the next few months. After that, the membership of the Society of Lloyd's will receive a final set of detailed proposals prior to voting on the reforms later this year. It appears that Lloyd's will be dragged kicking and screaming into the 20th century and possibly even the 21st!
Compliance Reviews of Lloyd's Actuarial Reports
A new compliance review procedure is being discussed by the General Insurance Board of the Institute and Faculty of Actuaries whereby every actuarial report for a Lloyd's syndicate will be reviewed by another actuary. Guidelines for the peer-reviewing actuary are being written, and consultation will follow. While it formalizes many external actuaries' peer-review procedures, the requirement that work by an internal actuary will need to be reviewed by an external actuary may well cause some ructions.
World Trade Center Losses
The completion of this past year-end for London and European insurance and reinsurance companies was obviously affected by the World Trade Center disaster. The General Insurance Board of the Institute and Faculty of Actuaries commissioned a working party to produce guidelines for U.K. actuaries to follow. If you are interested, the guidelines can be found on the Institute's Web site at www.actuaries.org.uk.
Seminars and Meetings
At the end of April, the seminar "Current Issues in General Insurance" will take place. The aim of the seminar is to allow actuaries to hear about the latest developments in topical areas with time available for discussion. Topics are expected to include accounting issues, asbestos update, state of the London market, and developments in household and motor claims. A "Brain Trust" will be the last session of the day, where a group of eminent people will field questions from the floor on any current issue.
The Casualty Actuaries in Europe's annual meeting is in May, where CAS President Bob Conger will provide an update on CAS activities with a focus on international issues and the question of mutual recognition. Simon Pollack will then talk about "The Capital Continuum—from Risk to Reward (via Capital Frameworks)." Simon will discuss the relationship between risk and capital, and how reinsurance can be viewed explicitly as a capital source.
This summer there will be a seminar on financial condition reporting, following up on the paper presented last year and the discussion at last year's GIRO. What makes this seminar interesting is that two case studies will be presented and the details will be worked through.
The next gathering of the U.K.'s general insurance actuaries will be in France(!) at the Disneyland Resort in Paris. British actuaries are eagerly looking forward to assessing the risk of falling off Thunder Mountain, the life expectancy of Mickey Mouse (he is rather getting on, isn't he?), and the potential for making a claim for dizziness symptoms after riding the teacups!
Details of the above gatherings can also be found on the Web site. In addition, the Web site has a General Insurance Reading Guide, which is a list of papers and books that all good general insurance/property/casualty actuaries should read.
But most importantly of all, we U.K. actuaries are looking forward to our extra holiday in June to celebrate the Queen's Jubilee.