Actuaries Abroadby Kendra Felisky-Watson
Blackpool Night Life Beckons Non-Life ActuariesCalling all beach lovers-the next gathering of nonlife actuaries (theGeneral Insurance Study Group or GISG) is in Blackpool, a favorite holiday spot of Victorian England. This year's GISG will concentrate on three main themes: the management of risk, the London Market and the Direct Market. However, I think the three subsidiary themes will be: the pub, the nightclub and the Pepsi Max (the largest wooden roller coaster in Europe).
The first meeting of the Casualty Actuaries in Europe Group (CAE) will take place at the GISG. Amazingly there are 45 names on the distribution list covering CAS members in eight countries-another indication of the value of CAS membership outside North America!
The full employment act for gen-eral insurance actuaries continues. Lloyd's is now requiring that ALL syndicates (162 of them) have actuarial certification of reserves for year-end 1997. This is in addition to the certi-fication required by the U.S. regula-tors. What makes this requirement even more harrowing is that there are two different bases for valuation: U.S. insurance law and U.K. regulations. Finally, the U.S. opinions are due to Lloyd's by the 16th of February! And to make our lives even more difficult, London underwriters have turned the downward turn in rates into an avalanche! Of course, each underwriter assures us that they are turning away unprofitable business and are not following the downturn in the market, blah, blah, blah. Yeah, right.
Actuarial Organizations Test Communication Skills
The CAS is not alone in changing its exam structure: the Institute and Faculty of Actuaries have also recently revised their exam structure. The exams are split into four groups. Series 100 consists of nine exams covering the basic skills an actuary needs such as actuarial mathematics, statistics and economics. Series 200 is a communications exam. Series 300 has four exams covering the four main practice areas: investment, life insurance, general insurance and pensions. Series 400 consists of the four fellowship exams, which treat the same subjects as series 300 but in more depth. Students must take all exams in series 100, 200, and 300 but only one subject from series 400. The most interesting feature of the new exam structure is the communications exam. Part of this exam consists of presenting students with a problematic situation and asking them to write a letter explaining the problem and solution.
Scenario Analysis and Equitas
In May a general insurance seminar on reinsurance was held at Staple Inn. The first presentation was about reinsurance treaty pricing techniques including a discussion of explaining the calculations to underwriters so that the underwriter can see how the actuary is adding value. The next discussion was on how a model of the impact of different reinsurance programs on a company's expected program can be used to quantify the capital at risk and how this is affected by different reinsurance strategies.The actuarial challenge of Equitas was described by the actuaries who work for Equitas. The biggest problem they have encountered is collecting and managing data when they have hundreds of thousands of policies and thousands of reinsurers with which to deal. Other topics during the day were the practicalities of the securitization of reinsurance, a practical guide to commutations and the modeling and management of catastrophe exposures. The final discussion was about risk-based capital including a description of the U.S. and Lloyd's risk-based capital systems and the possible impact on the U.K. insurance market of a risk-based capital approach on capital allocation.
Premium Ups and Downs: Ultimately Discoverable
The London Market Actuaries Group (LMAG) continues with its very interesting meetings. In April there was a discussion about why changes in premium rates should be monitored. The conclusion was that the monitoring process helps actuaries' understanding of the business being written and it helps to quantify the underwriters' "feel" for what is happening in the market. Of particular relevance to today's market, the cumulative effect of decreases becomes apparent. Also, since premium may be the only measure of exposure, inflation and rate changes are needed for methods like the Bornhuetter-Ferguson.
The insurance regulator, the Department of Trade and Industry, has asked all insurance companies for information on their asbestos, pollution and health hazards losses. The LMAG provided a great forum for discussion as to whether this would violate attorney/client privilege and what would potentially be discoverable. I suppose we will find out eventually.