General Insurance Convention 1997

Asbestos and Pollution Reserving Working Party. - Bishop, David A; Broughton, Jonathan; Hartington, Antony W; Ross, Julian G; Shaw, Richard A; Slater, David A. 59 pages.There has been a large increase in interest in latent claims over the last decade as many London Market insurers and reinsurers have suffered large volumes of asbestos and pollution claims from the United States. The aim of this paper is to bring together the publicly available information on each claim type and describe some of the methods which are used for reserving purposes.

Catastrophe Modelling Working Party. - Hartington, Antony W; Falcone, Mike; Mulcahy, William J K; Skinner, Janet E; Fisher, Steven; Sayers, Jeffery E; Waters, Leslie F. 90 pages.This paper consist of three sections: A Short Introduction - which discusses the role Catastrophes have played recently and some of the reasons they can be expected to continue to cause severe human and economic dislocation.A Review of Scientific Issues associated with Catastrophes. We will then discuss some of the scientific issues surrounding these catastrophes, the subject of climate change and the steps that may be taken to mitigate the damage caused by these events.A Review of Insurance issues and Catastrophe Modelling. In this section we address background to models, how they came into more common usage, overview their construction, give some basic information on some of the models and discuss how they are used in practice.

Commutations - a practical guide. - Joseph, Bryan R P; Robinson, Esmee J A. 6 pages.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.

Corporate decisions: beyond the frontier. - Cumberworth, Martin; Hitchcox, Andrew N; McConnell, William D; Smith, Andrew D. 38 pages.This paper shows how the powerful and flexible tool of stochastic modelling can be applied to a range of business decisions extending far beyond the asset allocation solutions that are common to many ALM studies. The example used to demonstrate these techniques is a non-life case study, but similar principles can be extended to many different business situations. At each stage of the analysis we consider the implications of modern financial theory on the management decision process together with a practical perspective on observed behaviour in the real world. Opportunities are taken to suggest directions into which further research may be of benefit to the actuarial profession.

Corporate capital vehicles. A better approach to capital allocation? - McPherson, James. 8 pages.This paper outlines the current corporate capital structures within Lloyd's. It also considers how these structures compete for the right to participate in underwriting and suggests a method for assessing a fair price. Lastly, consideration is given to whether the advantages of Lloyd's unique capital structure could be introduced within large insurance companies.

Customer selection and retention. - Bland, Richard H; Carter, Timothy D; Coughlan, David P P; Kelsey, Richard; Anderson, J Duncan; Cooper, Susan M; Jones, Stephen Michael. 22 pages.This paper is a look at the relations between personal lines insurance companies and their customers. The paper covers all personal lines to some extent but highlights motor insurance as the most widespread and well understood personal lines product. The paper divides into three sections: how to obtain the right customer, how to retain your customers, and a crystal ball peek into the future of insurance distribution.

Data mining concepts and practical research [summary only]. - Bedeman, Trefor; Rothwell, A Mark. 1 page.

Europe - the changing markets [summary only]. 1 page.

Expense allocation for premium rating [summary only]. - Fuller, Derek; Morgan, Kathryn A. 1 page.

Future actuarial developments in household insurance [summary only]. 1 page.

Geographic information systems for household insurance [summary only]. - Wright, Thomas S. 2 pages.

Household Business Working Party report. - Crozet, Jean-Bernard; Horel, Viviane; Jones, Stephen Michael; Michael, Elizabeth E; Winter, Richard D. 60 pages.This paper describes various aspects of the UK household insurance market during 1997 and some of the actuarial considerations arising therefrom. Its purpose is mainly documentary and as such it should not contain too much material that is unfamiliar to an experienced practitioner. For part-qualified actuaries, however, or for actuaries working in areas other than household insurance, the paper may provide an easily-digestible introduction to current issues.The working party make no apology for having concentrated on those aspects of UK household business that interest them most. In particular, the paper's emphasis is on pricing rather than reserving issues. Particular consideration is given to the increasing use in pricing of external datasets, and the related trend towards classifying risks to a finer level of detail.

Internet and intranet technology. - Bland, Richard H. 8 pages.

An introduction to statistical premium rating [summary only]. - Anderson, J Duncan. 1 page.

An investment analyst values a European insurance company [summary only]. - Warren, Graham J. 2 pages.

Lloyd's US opinions [summary only]. 2 pages.

Mortgage indemnity guarantee [summary only]. - Davies, David. 3 pages.

The premium rating of commercial risks. - Michaelides, Nicholas; Brown, Peter R; Chacko, Francis X; Graham, Mark C; Haynes, Jeremy W; Hindley, David J; Howard, Sheree K; Johnson, R Henry; Morgan, Kathryn A; Pettengell, Craig T; Rodriguez, Richard A; Simmons, David S. 95 pages.The purpose of this paper is to provide accessible, comprehensive and action provoking material for general insurance actuaries. This should provide guidance on how to approach commercial insurance pricing and help to develop skills in this area.It is the intention of the Working Party to avoid duplication with previous work whether carried out on a broad basis or specific to individual classes of business, in particular relating to personal insurance and London market business. Additionally, other work will be taken for granted including general management issues such as capital and expenses allocation in order that the paper can focus on the particular issues surrounding this area of the business.The scope can be expressed in terms of the two dimensions of the size of the risks involved and the nature of the cover provided. Three broad groupings of policyholder size have been considered being small, medium and large which are closely correlated to the pricing approach adopted. The second dimension has been restricted to Liability, Property and Motor and the different issues which arise from these business areas have also been outlined in the appendices.

Reinsurance treaty pricing [copies of slides]. - Hitchcox, Andrew N. 19 pages.

The securitisation of insurance risk. - Ahmed, M Amer; Bulmer, J Richard; Clark, Peter K; Collins, Jonathan A; Fulcher, Graham; Lualdi, Maurizio; Robinson, Esmee J A; Sayers, Jeffery E; Spence, Alan C; Walker, Stephen R. 79 pages.In 1992 the Chicago Board of Trade launched a series of insurance futures and options contracts. These are based on indices linked to the incidence of natural catastrophes in specified regions of the USA. At the time, this was hailed as a major and revolutionary development within the insurance industry. However, although trading volumes in these contracts have picked up in recent months, volumes remain relatively limited, apparently because there are currently more natural buyers than sellers of such instruments. There were then few major developments in securitisation until 1995. However, during the last two years, several insurance entities have issued a diverse range of investment instruments where the investment return is linked in some way either to the incidence of insurable events or the performance of an insurance portfolio. Instruments which have been launched or proposed include:- Catastrophe bonds, where the return on the bond is linked to the incidence of natural catastrophes.- The securitisation of an individual insurance portfolio, where the return on an investment instrument is related in some way to the profitability of insurance business written within the portfolio.- Contingent capital facilities, where the issue of debt or equity capital is linked to the incidence of natural catastrophes or the performance of an insurance portfolio. In some cases, the provision of capital is not dependent on the prior occurrence of an insurance event. Against this rapidly changing background, the Working Party has produced this paper with the following objectives:1) to explain why there has been an increasing level of interest in the securitisation of insurance risk.2) to describe the more significant investment instruments which have been launched or proposed in the last two years.3) to analyse these instruments, and to discuss their individual advantages and disadvantages. A substantial proportion of the early issues failed or were withdrawn, and we explore in this paper why this was so. More recent issues have met with a greater degree of success.4) to suggest possible future developments which may take place during the next few years in the area of securitisation of insurance risk. In particular, we consider whether or not, as some people suggest, securitisation will fundamentally change the way insurance and reinsurance are written.

Statutory Reserve Reports and Opinions Working Party. - Bennett, Paul; Clark, Peter K; Coughlan, David P P; Czapiewski, Colin J W; Czernuszewicz, Andrzej J; Hart, David M; Hubbard, Andrew; Johnson, Peter D; Jones, Elizabeth A; Joseph, Bryan R P; Ryan, John P; Sheaf, Simon H. 45 pages.This year, much more effort has been concentrated on what needs to be done and associated professional issues. Clearly, normal Institute standards apply but included in the attached paper is a detailed description of accounting procedures. This is of particular relevance in the area of restricted access to information which would lead to a qualified opinion. Other issues include inadequate data. We also covered the question of practising certificates and current practice in other areas. We have not attempted to make recommendations; merely to lay out the arguments. We have taken as our brief an opinion on claims reserving rather than an opinion on the financial condition of a company. In general, we would have a preference for opining net of reinsurance as some smaller companies might not have a sufficient spread of business for stability at the gross level. One of the issues on which actuaries could opine is the bad debt provision. Another working party is reporting on this.We have also highlighted claims reserving areas and techniques where we feel more documentation is required in the UK literature. Our aim has been to assemble sufficient information to allow the profession to form its views as to how to proceed.We could have produced a draft guidance note but it should be noted that, at the time of going to press, it is anticipated that draft guidance notes will shortly be available from the Institute for both the UK and US Lloyd's Opinions. Consequently, the Working Party has done less work on this than would otherwise have been the case as it would merely have duplicated the effort.It is of fundamental importance that these issues be debated by the profession so that a consensus can be formed and the profession can proceed on a united front. We would therefore very much welcome input and comment.

An update on stochastic reserving methods and associated measures of reserve variability [summary only]. - England, Peter D; Aghadiuno, Chika. 4 pages.

No paper is available for the following Working Party:

• Analysis of reinsurance security. - Shaw, Richard A; Mackie, Fergus J.

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

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