Source in GRIT paper

1.6.8
"We recommend that the profession, if possible in conjunction with other market bodies, commissions an inventory of terms and conditions for selected lines of business. These can then be tracked and monitored against changes in market practice and made available to all interested actuaries"

1.7.4
"..syllabus should be extended to include more on
…
how terms and conditions can change and affect the liabilities of the insurance contracts (note that we also suggest that the profession needs to carry out research to identify and monitor changes in terms and conditions)"

Draft Terms of reference

1. The Working Party (WP) is constituted as a sub-committee of ROC, and will report to ROC. The chairman of the WP will be a member of ROC and will be responsible for co-ordination and communication between the WP and ROC.
2. The WP will report progress on a regular basis (e.g. monthly or bi-monthly) to ROC. This will include actions planned, issues identified, emerging conclusions, and progress against timetable.
3. The deliverables of the WP will include a report for GIRO 2007. A draft of this report and any other deliverables will be provided to ROC in draft for comment before wider distribution by the WP. In any reports or other deliverables or communications made by the WP, the WP should not claim to speak with the authority of ROC or the GIB without prior approval of ROC.
4. Define lines of business where changes to terms and conditions are material reserving issues - focus expected to be on London Market business, since this is market in which terms and conditions show the greatest variation.
5. Identify and review any previous work carried out in this field – use as a starting point if appropriate.
6. Compile a list of key terms and conditions have changed over time, and particularly those that change over the course of a market cycle.
7. Define in layman's terms what each of these mean, and how changes can change profitability on a risk.
8. Identify current status of the T&Cs and define approach to tracking over market cycle – consider establishment of standing committee?
9. Indicate extent to which each has changed over past 5-10 years (or longer?).
10. Quantify impact of changes: As appropriate
    • provide indicative benchmarks to indicate impact; or
    • propose methodologies to assess impact that can be adapted to particular circumstances
    noting that impact may be more complex than simply change to loss ratio. For example, may change the development profile, or may have a different effect on primary and excess layers.