Reserve reports and opinions - outward reinsurance

Document description

The working party has identified the following as the key issues that arise in the consideration of outwards reinsurance in the context of providing an actuarial opinion on the insurance technical reserves. 1) Bad debts - should actuaries make a decision on which reinsurers to make a provision for? There is a role to play in providing information on recoveries by layer and by probable timing of recovery. 2) Data - what is available and how has it been constructed? 3) Accounting framework - understanding this, especially in relation to the going concern or run-off basis. 4) Market practice and administration of reinsurance - an understanding and appreciation of this. 5). Policy wording and terminology - in particular the interaction of a programme structure. 6) Financial reinsurance. 7) Exhaustion and adequacy - which may require sensitivity tests, and will demand an appreciation of variability. Consistency - in particular, how far can the past be expected to be a guide to the future. 9) Premiums - the fact that these are often loss- or exposure-sensitive. 10) Legal issues and disputes. 11) Diversity of contracts and programme structures - from the large direct composite to the small London Market specialist. 12) Volatility of loss experience - which therefore gives rise to limitations of statistical methods.