General Insurance Convention 1985
Cheltenham, 1985
Accounting standards for general insurance companies. - General Insurance Study Group. 4 pages.
Following discussion on reserving standards at the Bristol Seminar of GISG in November 1983, an informal working party of accountants and actuaries was established to consider matters of mutual interest to the professions in the general insurance area. Discussion centred on the possible content of an accounting standard for general insurance companies and this led to a discussion paper which was tabled for the Bournemouth Seminar in September 1984.
Cash mechanics of proportional treaties. - Matthews, Peter N. 25 pages.
We have only just started to uncover the mysteries surrounding the cash mechanics of proportional treaties. Much work still remains to be done. We need to consider the implications of letters of credit, the allocation of administrative costs both direct and indirect, the influence of premium and claim portfolio transfers, together with further theoretical analysis behind our general observations.
The paper has been written with a view to stimulate an interest and understanding of the monetary implications of proportional treaties.
Estimating outstanding claims reserves - from the standpoint of an external observer. - Ross, John Andrew; Pountain, Christopher C. 19 page(s).
In this paper we describe a computerised method of assessing the relative strengths of the outstanding claims reserves of general insurers from the statutory returns.
While Wood MacKenzie & Co. Ltd. has developed this system principally as a tool of investment analysis it could also be of interest to insurance brokers, the Regulatory authorities and the insurance companies themselves. The method, which in its latest phase of development includes an explicit allowance for inflation, is described in detail in the appendices with the main body of the paper concentrating on general principles.
The means by which historical reserving strength is gauged are touched on and possible sources of distortion are discussed.
The success of the method in practical use is illustrated and we end by suggesting improvements to the data available.
Extended warranty. - Michaelides, Nicholas. 9 pages.
These notes approach the problem of projecting claims with data as provided in table 1. While the data provided retains the shape of the original, it has been transformed so that neither frequency nor average cost are representative of actual absolute values.
In tackling this forecasting problem we could either project the value of claims or make separate forecasts of numbers and their average cost. In table 4 the claims have increased by 19% in the last twelve months compared with an increase in RPI over the same period of only 5%. Superimposed on inflation is an increase in the severity of claims which would be expected as appliances age. However, it is possible that some of the increase in claims frequency expected over the duration of the policy might arise from an increased number of minor claims so that the average cost of claims could fall at some stage. It is therefore proposed that each component of ultimate cost be considered separately and these notes are restricted to numbers of claims.
Indexed annuities and the stability clause. - Alting von Geusau, Bob J J. 15 pages.
In some reinsurance contracts of the Casualty Excess of Loss type (XL) one may find simultaneously two clauses defined separately:
1) the Stability Clause (SC): in this clause the procedures are formulated by which the burden of monetary inflation is shared more equally between the insurer and the reinsurer, i.e. between the two parties of the XL- contract
2) the Indexed Annuity Clause (IAC): this clause gives the rules according to which claims of the Indexed Annuity type (e.g. as a consequence of a traffic accident) are settled in the XL-contract.
Of both clauses there is a score of variants available with each of them having its own merits and justifications of existence.
It is not the purpose of this paper to describe all these variants and to select finally the best one according to some reasonably objective criterion.
The paper merely describes formally the most frequently seen variant of the Stability Clause. Furthermore it tries to prove that as soon as this SC has been accepted, there is no reason to define a separate IAC since all the mechanisms of the latter are already handled implicitly in the SC.
Insurance Corporation of Ireland. - General Insurance Study Group. 3 pages.
This case illustrates dramatically that even when a company appears to meet the solvency requirements satisfactorily, with a margin to spare, it may in fact be tumbling into insolvency. Far from the supervisor being able to recognise the situation, the company may not itself know what is happening. In this case there were warning signals from within the market, but no-one seems to have acted upon them. The London business was too immature and growing too rapidly for any realistic assessment of the true position to be made from the accounts or from the returns to the supervisory authorities. The rate of growth of business should perhaps have rung bells, as should the market gossip about ICI's underwriting policy, or lack of it.
The meaning of composite insurers' results. - General Insurance Study Group. 2 pages.
All the quoted UK composite insurers spend considerable time and effort communicating their results to their shareholders. Attention tends to focus on pre-tax profits. But what precisely is this supposed to mean, and what conclusions should shareholders draw from it?
Reinsurances outwards in the London market. - General Insurance Study Group. 22 pages.
This note has been written for actuaries making acquaintance with the London reinsurance market and needing to know how the market operates. The note is detailed and the subject is complex. Other actuaries may like to use it to gain an introduction to the subject and as a source of reference. One note of caution is advisable - different terms are often used by different people in the London Market for the same thing; sometimes the same term may be used by different people to mean slightly different things.
Report of the Solvency Working Party - abstract. - General Insurance Study Group. 1 page.
The Working Party sets out to challenge the traditional approach to the solvency of a general insurance company based on balance sheet accounting concepts and to apply actuarial concepts of cashflow to the run-off of a portfolio of general insurance business. However, the uncertainties in the amount of the liabilities necessitate a stochastic approach rather than a deterministic one and the difficulty of matching the liabilities with suitable assets presents a similar need to take explicit account of asset variability.
The solvency of general insurance companies revisited. - General Insurance Study Group. 33 pages.
The Working Party has established a simulation model for investigating the behaviour of the run-off of an insurance portfolio under various conditions. Initial work has been confined to the study of the run-off of the assets and liabilities of a closed portfolio, but the model is in the course of being extended to incorporate the possibility of continuing new business, in the first instance for a year or 18 months, but possibly eventually for longer periods.
Statistical methods for general insurance. - Carroll, Patrick S. 1 page.
In the workshop it is intended to discuss possible use of new textbooks for training and education purposes. Are they suitable for inclusion in the reading list of either the A or the examinations or university examinations? What research needs to be done to assess the value of the new methodology which has now been made more accessible? What should a new textbook in the native British idiom set out to achieve?
Suggested syllabus and reading for general insurance. - General Insurance Study Group. 8 pages.
A survey into the estimation of provisions for outstanding claims by actuarial/statistical methods. - Truckle, William W. 10 pages.
The purpose of the survey was to assess the extent to which actuarial/statistical methods are used in estimating the provisions for outstanding claims in some of the major non-life insurers. It was also intended to discover the methods employed in practice and the manner in which their results are translated into the provisions.
Unexpired risk reserve. - Rowlandson, William J F. 5 pages.
The only formula I have ever seen for calculating the URR (and the one applied by the DTI) basically requires that the total premium reserves at the end of a year should be:- (Claims ratio for the year) x (Unearned premiums at end of the year). If the result exceeds the Unearned Premium Reserve (UPR) then the difference must be set up as URR. This seems unobjectionable until one analyses the components of each term.
Use of expert systems in non-life insurance. - General Insurance Study Group. 2 pages.
Any actuary in non-life insurance must realise the potential and limitations in the use of computer power. Indeed in the insurance world an actuary is in a unique position to appreciate an overall view and should be heavily involved in the planning of computer systems.