General Insurance in the U.K.
by Kendra M. Felisky-Watson
Institute and Faculty of Actuaries Briefing StatementIn August, the Institute and Faculty of Actuaries issued a Briefing Statement on Asbestos Related Diseases in the U.K. Briefing statements are occasionally issued in response to questions about important topical issues and are not formal guidance. U.K. asbestos-related claims are generally recognized as less developed than those in the U.S. but the ultimate level of U.K. claims is still under speculation. Studies indicate the ultimate number of asbestos-related deaths in the U.K. may be 80 percent of the number of U.S. deaths even though the U.S. population is five times that of the U.K.! The U.K. House of Lords has recently ruled in the U.K. on a test case regarding mesothelioma cases where there are two or more defendants. While the House of Lords determined that all defendants are liable, it deliberately side-stepped the issue of apportionment of liability. The briefing statement was issued to describe how actuaries can help insurance companies and others assess the required levels of asbestos claim reserves. The full briefing statement can also be found on the Institute's Web site.
Financial Conditioning ReportingIn November, an all-day seminar will take place on financial condition reporting. While the Financial Services Authority (the regulatory body here in the U.K.) will not require financial condition reporting for a few years, it is imperative that insurance and reinsurance companies start planning for the impact financial condition reporting will have. Financial condition reporting is the regulation of an insurer's solvency from a dynamic financial analysis perspective. The first new requirement within the FSA proposals is that insurers should have adequate financial resources to protect policyholders against the risk that insurers may not be able to meet claims. This is a positive obligation, rather than the current passive one not to trade while insolvent, and is clearly more rigorous than the existing "snapshot" test of solvency. The second new requirement is that an insurer must have documented the process it has used to ensure its financial solvency. Basically, companies will have to demonstrate that they have adequate resources to meet valid claims, not only if the outcome is as expected, but also if there are adverse developments. The obligation will be on the company to identify the risks it faces, and to ensure there is adequate capital or an appropriate response. This seminar will present several case studies and models.
Allan KaufmanCongratulations are in order for Allan Kaufman! Just so you know, the actuarial profession in the U.K. consists of the Institute of Actuaries (England and Wales) and the Faculty of Actuaries (Scotland). Practically all matters pertaining to actuaries are administered jointly between the two societies, which delegate governing responsibilities for each of the practice areas (pensions, life, investment, and general insurance) to practice boards. And, importantly, the General Insurance Board has a newly appointed memberour own past president, Allan Kaufman! Now there are two casualty actuaries serving on the General Insurance Board: Allan and yours truly. We are hoping that Allan's appointment will enable relations between the CAS, Institute, and Faculty to continue to grow and prosper.