Commutations - a practical guide

Document description

A commutation is a commercial agreement between an insurer and its insureds. It is not an actuarial calculation, although actuaries are, or should be, involved at most stages of the calculations and negotiation. This paper is meant to address commutation from a practical perspective. We will illustrate using examples, some of the issues involved and the techniques which might be considered for the evaluation of liabilities and identification of the risk premium involved.