Conference paper

This Guidance Note was issued in August 1987 with a requirement for it to be reviewed at the end of 12 months in the light of the experience of members using it. Specific submissions on GN12 have been received from the London Market Group, the Faculty of Actuaries and the Institute of Chartered Accountants. There have also been some comments made by individuals including the reportage of the discussion at Harrogate.

At the GISG Conference in 1988, two working parties were established in the light of G. Hunt's initiative - one to consider the possible formats / content of actuarial reports in the context of statutory supervision of general insurance companies in the UK and the other to consider the specific content of DTI returns and its relevance to the supervisory process. This brief note sets out some key thoughts on DTI returns; we regard the points made as a progress report and not definitive; we would welcome comment and discussions at Brighton.

Following the GISG Convention in Torquay in October 1987 this working party (the CWP) was set up to examine claim run-off patterns. This followed a suggestion in a paper on the discounting of general business claims reserves. It suggested that standard payment patterns might be appropriate for discounting claims reserves in certain circumstances. Alternatively standard patterns might be used as a starting point against which a company's experience could be assessed. It was suggested that these possibilities be investigated further.

This paper examines exposure to insurance claims within the London Market and Lloyd's environment. A comparison is first made with direct non-life insurance then the more specific problems of the London Market are emphasized and possible solutions discussed. Other types of exposure such as asset failure, reinsurance failure, expense escalation, etc... are not covered.

This paper provides a description of an example of a model which originally uses the multiplicative specifications but which is generalised easily to the use of additive factors.
Only the basic technique is given, which means that some major points are still open: for instance when to use the purely multiplicative model and when the mixed one.
The paper is concluded with some examples from real life.

Actuarial reporting in general insurance is a topic that the Convention has considered on several occasions in the past, although 1988/9 was perceived, quite rightly, to be a period of heightened activity and debate. In a letter dated 20 July 1988, Geoff Hunt invited observations concerning the role of DTI returns from the Institute of Actuaries and the insurance industry in general as part of a review commissioned by the government. Exhibit 1 displays a copy of this letter from Geoff Hunt, who was seconded to the DTI to carry out the review.

This is the first paper to be produced by the General Insurance Study Group on the subject of liability insurance. This is such a potentially broad subject that we need to constrain our ambitions in order to produce a useful paper. The aim of the group is to provide a background to the concept of liability itself and some of the special features of its insurance. We have tried not to restrict our thinking either by class or territory but the examples we provide naturally reflect the background of the group.

The purpose of this report is to give a resume of this subject in an easily readable form. It also gives some details about what companies currently do in this area. It is hoped that the report will provide a better understanding of the subject and will provoke companies to give more attention to the analysis and allocation of expenses; also that the problems highlighted in the report will lead to a discussion of possible solutions. The report should also be of interest to the student of the General Insurance examination of the Institute.

This working party paper is therefore intended to provide a general introduction to the subject, which is largely missing from actuarial literature: to cover basic planning elements common to all businesses; to highlight certain features specifically relating to general insurance; to discuss aspects of actuarial involvement in planning; to give suggestions for further reading. While much of the approach to strategic planning as described in this paper is (or should be) straightforward commonsense, the formulation of a strategic plan can prove a major challenge in practice.

Although a 1987 Institute paper by this Working Party certainly did not say all that could be said on the subject of solvency, from a statutory or supervisory perspective, the Working Party felt that the focus of attention should move to the broader issue of financial strength, the long term financial well-being of an insurance company. Statutory solvency and Companies Act solvency can be regarded as subsets of this broader concept. For statutory solvency considerations, new business may be assumed to cease, either immediately, or after a short period of continued business.