Mortgage indemnity guarantee. Report of the Pecuniary Loss Working Party

Document description

This paper describes the recent work of the Pecuniary Loss Working Party (PLWP). Section 2 provides the context for the recent work and describes the decision to maintain concentration on Mortgage Indemnity Guarantee (MIG). Section 3 contains descriptions of recent product developments, including the use of captives, and of current market practice in reserving based on a specially arranged survey. The development of the Macro Relationship Model is covered in Section 4. The key conclusion here is that the PLWP has reached the stage where it can point the way ahead but further progress must be made by individuals and organisations with the appropriate resources. The general evolution of research into a Catastrophe Warning Indicator is described in Section 5. It is hoped that detailed results will be available for presentation at the GIRO conference in October 1993. Section 6 covers the further development of the Premium Rating and Reserving Model. The key conclusion here is that not only the levels, but also the ' shape'; and basis of premium rates depends very strongly on the underwriting assumptions made. Next steps are covered in Section 7.