“Fluctuating market conditions, not just linked with the risks of Brexit, but also the underlying trends of over-capacity and pricing pressures, increase the risk that reserves are understated. General Insurance reserving actuaries should be aware of the cyclical nature of market conditions, the current position within this cycle and the need to take this into account when advising those making decisions on reserves.”
GI ROC have put together a short collection of papers containing background reading that reserving actuaries may find useful in the current market conditions.
The overriding advice from GI ROC is to make sure you understand your data, and the exposures and claims and external environment surrounding it (for example, changes in rates charged or in terms and conditions). It is also important to appreciate how a soft market can impact claim development patterns.
Background reading
- The GRIT report, 2007 – In particular see section 5 on Understanding the Business Better (page 46)
- The Cycle Survival Kit – An investigation into the reserving cycle and other issues, 2003
- Underwriting and reserving cycles working party paper 2008 (including some practical advice in section 5)
- Defence against the dark arts - a practical handbook for reserving actuaries – Lis Gibson, 2008
- ‘Dear CEO’ letters from the PRA:
- July 2016, includes analysis of data from across the industry
- December 2015, weaves underwriting, reserving and capital considerations together
- November 2014, including expectations of Board.
Related documents
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GIRO Terms of Reference
17 February 2015
Contact Details
If you have any questions about a practice area, its working parties, Member Interest Groups or Board and sub-committees, please contact the Communities Team:
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