General Insurance Convention 1995

Actuarial support for claims assessment: 'Should actuaries talk to claims managers?' [summary only]. - Brickman, Simon J; Singh, Budhiraj. 3 pages.
The main purpose of our workshop is to demonstrate that actuaries in General Insurance have a much wider role to play than the traditional ones of Rating, Reserving and Reporting. We believe that the actuary should work closely with the claims manager both in terms of understanding how the claims manager's role affects the 'patterns' the actuary uses and equally important, demonstrating how we can bring our skills to bear in the arena of claims assessment.

Aviation. - Hughes, Victoria J; Lyons, Graham E; Morgan, Kathryn A. 10 pages.
This paper is intended as a basis for a workshop session at the conference and as such is brief. An outline of the market is given with descriptions of the main classes of business and outwards reinsurance. Some references are given for further reading and the CII can provide a comprehensive reading list.

The bootstrap method and some reserving applications. - Larsen, Christian R. 10 pages.
It is concluded that if the individual claim data are available the Bootstrap is an effective method to calculate approximations to the uncertainty distributions of claims reserves. Only distribution assumptions regarding the claim frequency are required. The application is not dependent on the reserving method and even for complicated reserving methods the uncertainty can be estimated. It can be used to select between different reserving methods to obtain the most robust method and to calculate reserving margins.

Capital, profit and risk [copies of slides]. - Hitchcox, Andrew N. 21 pages.

Designing ad-hoc management reporting systems. - Gedalla, Brian; Kneller, Simon C; Levay, Edward J; Skurnick, David. 7 pages.
As the title implies this paper aims to give an Actuarial viewpoint on the factors that may be considered in designing a Management Information system. This is an area that would traditionally be viewed as outside the realms of an Actuary, but there is no doubt that for many Actuaries the availability (or lack of it) of good quality management information has a significant impact on their productivity. As the roles' of Actuaries expand there are both challenges and opportunities. The challenge is that the expanded role will require even more management information, and the opportunity is that of being able to influence the design of the Management Information System.

Exposure to risk in the London Market. - Azzopardi, Mark H J; Craighead, David H; Carroll, Patrick S. 21 pages.
The aim of this discussion paper is to attempt to follow the way in which risk is assessed at various stages in the insurance process. The thread is as follows. Data is presented to an underwriter. Risk is assessed by the underwriter and the business may be accepted. Data is logged. Claims are lodged or an expectation that they will be lodged arises. More data may be collected. From this data, a requantification of the cost of the assumed risk, given that an event has/ has not occurred, is made. This data is logged and by means of extrapolation in a reserving process (by class, by whole account. by individual proportional treaty or lineslip where required) the results can be used by the underwriter as part of his assessment of the risk inherent in future business.

Household insurance. - Bolton, Clive G; Button, Andrew D; Carter, Timothy D; Leitch, Kenneth A; Pettengell, Craig T; Pitt, Helen R; Webb, Philip D C. 31 pages.
This paper describes the work of the Household Insurance Working Party in 1995. As in 1994 the analysis has concentrated on the subsidence and flood risks. The paper has been divided into three main topics :-
- Tracking the variance in buildings rates for areas of high flood and
subsidence risk.
- Assessment of the Halcrow Study on sea defences and comparison with the Greig Fester flood model.
- Assessment of the effect of house sales on the number of subsidence claims reported.

Insurance as a capital project. - Dwonczyk, M Dean; Sanders, David E A; Kaye, Geraldine D. 19 pages.
Actuarial techniques coupled with the "big picture" knowledge base of actuaries make the actuary extremely well placed to add value when it comes to appraising capital projects.
Ordinarily when the words "insurance" and "capital projects" are used together, the writer is referring to the purchase of an insurance policy to transfer or share some of the capital project risk with an insurer. The objective of this paper is to consider whether added insight can be gained into the likely future performance of an insurance company by treating it as a capital project.

Managing a business in run-off. - Hartington, Antony W; Piper, Jonathan M; Townsend, Stephen N. 10 pages.

Personal injury compensation [summary only]. - Carroll, Patrick S. 3 pages.

Pricing in the London Market. - Sanders, David E A; Grealy, Patrick F; Hitchcox, Andrew N; Magnusson, Torbjorn; Manjrekar, Ravi; Ross, J; Shepley, Stuart M; Waters, Leslie F. 109 pages.
The paper is split into 2 primary sections. The purpose of these sections is to give a good but broad view of the techniques. Examples are included in each of the sections and are augmented by further examples in Appendix 3. A summary bibliography is included together with references to additional reading. It should be noted that this reference list is not comprehensive. Section 3 of this paper deals with the individual risk methods which are used currently in the day to day assessment of risks. Methods in this section are of value to those actively assisting the underwriter. Section 4 deals with the other issues which are normally implicit in the current pricing but need to be expressed explicitly. These include risk/reward approaches and detailed analysis of the cash flows and investment income (profit testing). These more general approaches have been used, and possibly of more substantial benefit to management than the "premium checking" approach in section 3. The concept of the insurance cycle is introduced.
In Section 5 the challenging issue of actuaries being actively used in underwriting is broached. There are many views on this subject, and some of the issues are addressed in that section.
In Appendix 1 we try to identify other methods which have been used by one or two individuals to assess rates, but are generally not well known or adequately tested. These include approaches from Financial Theory and from Neural Networks. These methods are rapidly becoming part of today's actuary's toolbox and is an area of continual interest. These are both new directions and esoteric methods. Such methods, if they pass the test, will become the standard pricing techniques of tomorrow.

Rating agencies. - Felisky-Watson, Kendra; Mardon, Timothy P; Slater, David A. 10 pages.
This workshop paper is aimed at providing background information for a workshop presentation at the GISG 1995 convention. More practical examples will be given at the convention, whilst this paper describes in overview what the Rating Agencies do and how the ratings are used.

Stochastic asset liability modelling. - Ryan, John P; Bulmer, J Richard; Byrne, Patrick; Coutts, Stewart M; Lowe, Julian A; Wells, Gary G. 9 pages.
Notwithstanding the title of the Working Party, it was felt that work in this area as far as actuaries are concerned should not be confined to stochastic modelling. There were not an insignificant number of cases or even possibly majority where a deterministic scenario approach was more appropriate. It was often much easier to evaluate models in terms of the physical world in the context of the deterministic scenario and also could often be easier for the actuary to explain to the end user.

Stochastic asset models. - Smith, Andrew D. 77 pages.
Asset return scenarios are a vital ingredient to any model of an insurance enterprise. The workshop will present and contrast various approaches which have been tried for generating stochastic economic scenarios. We consider models within various classes. The objective is to provide working examples of the main approaches, rather than statistical investigations. We will then outline suitability criteria for the various models and see how they square up.

Time series in general insurance [summary only]. - Carroll, Patrick S. 4 pages.

Update of the Claims Reserving Manual. - Taylor, John M. 3 pages.

The use of derivatives in general insurance. - Sanders, David E A; Kaye, Geraldine D; Miranthis, Constantinos; Pettengell, Craig T. 32 pages.
A General Insurance Company both accepts risks and manages them. It does this in ways generally not available to an insured and attempts to produce a profit for providing this service. The difference between profit and loss is small, and an insurance operation could readily be running extensive unplanned risks which could lead to its downfall.
Actuaries are playing increasingly active roles in the sound and prudent management of non-life companies. They are well placed to understand enough of other disciplines and broader business issues and hence ensure that the proper measures are taken.
This paper is therefore intended to provide actuaries with an overview of the relatively new tools of modern risk management, the derivative instrument, and how it might be used to manage risk in the context of a general insurance company.

No paper is available for the following Working Party:

• Communicating uncertainty. - Evans, John; Iloenyosi, Chika; Miranthis, Constantinos; Pater, Richard; Rakow, James C; Townsend, Stephen N.

If anyone can supply a copy of this paper we will add it to the site.

Return to Conventions listing