International Pricing Research

The objectives of the International Pricing Research Working Party are to:

• study the disconnect between property reinsurance submissions and the information preferred and needed by both primary carriers and reinsurance underwriters and actuaries
• understanding what information the reinsurer needs, benefits all parties involved in an insurance transaction – from the main street buyer to the agent to the primary insurance carrier.

Working towards:

• the Working Party started with Property Risk for 2015 utilising a survey amongst actuaries and underwriters, investigating the various levels of what makes a good submission to be included in a forthcoming White Paper
• for 2016 and beyond, the working party may extend to other property or casualty lines such as e.g. property cat, crop insurance, motor, employers liability, cyber or other emerging issues.

Latest updates:

Joint IFoA/CAS International Pricing Research Paper now available, 22 March 2016

We are pleased to announce that the research paper for analyzing international Property per Risk exposures is now available on the IFoA website. In 2015, the Institute and Faculty of Actuaries General Insurance Research Organization (IFoA-GIRO) and the US Casualty Actuarial Society's Casualty Actuaries in Reinsurance (CAS-CARe) jointly formed a GIRO working party to produce this reference document for usage by underwriters, actuaries, and other pricing practitioners internationally.  This paper represents the broad ranging results of this research. 

This research paper is intended to fill the void in the currently available actuarial literature related to information required by the primary and reinsurance pricing practitioner, but often lacking when pricing property per risk coverages worldwide. Results from surveys of members in the UK, European and US actuarial communities, as well as others in the related insuring communities, clearly indicated a distinct disconnect between the desired information and the information commonly included within a submission.

Sections of the research paper range from analyzing various amount of insurance definitions typically used worldwide, analyzing the impact of each of the traditional property risk characteristics (standard COPE - construction, occupancy, protection, and exposure), producing robust price monitor systems, and using information typically included in cat model submissions.  It is hoped that this information will illustrate the importance of each of these data elements, as well as providing a reference document that can be used by all parties to the insuring transaction.  This reference usage would include agents/brokers, primary companies, intermediaries, and reinsurance companies.  Much of this information may also be appropriate for usage in other property and casualty lines of business. 

The results of this GIRO Working Party reference document will be presented at the Boston CARe conference in June 2016, by two of the authors: John Buchanan and Chris Boggs. http://www.casact.org/reinsurance/

Updated Joint IFoA/CAS International Pricing Research Paper now available, August 2017

The original Pricing Research Paper was published by the Institute and Faculty of Actuaries (IFoA) and Casualty Actuarial Society (CAS) in March 2016. It was written and reviewed by a global slate of actuaries, underwriters, educators, and other leading industry experts.  It was then submitted to the General Insurance Research Organisation (GIRO) committee for consideration of the annual Brian Hey prize.  The paper was announced as the winner at the annual GIRO convention in Dublin, Ireland, in October 2016.

This Updated Paper, was peer reviewed by the IFoA, as well as edited by the CAS, for publication in the British Actuarial Journal. This revised paper reflects the suggested changes by both the IFoA and CAS. In addition to review recommendations, the paper now includes additional help for practitioners such as an Amount of Insurance (AOI) reference guide and visuals in Chapter 6, a more detailed Property Per Risk acronym reference in Appendix E, and a new Chapter 13 entitled Other Market Considerations. This new chapter helps bridge the gap between the "ideal" world contemplated in most of the rest of the paper, with additional competitive marketplace phenomena, such as the Winner’s Curse, Submission Bias, and Managing Overconfidence. Additional references and Appendices have also been included.

Outputs:

• IFoA/CAS Paper overview - Annual Meeting of the Casualty Actuarial Society (November 2019)
• Analyzing the Disconnect Between the Reinsurance Submission and the Global Underwriters Needs - Property Per Risk (Updated, August 2017)
• Analyzing the Disconnect Between the Reinsurance Submission and Global Underwriter's Needs - Property Per Risk (Final White Paper, March 2016)
• Analyzing the Disconnect Between the Reinsurance Submission and the Global Underwriters Needs (GIRO, October 2015)
• GIRO, October 2015 synopsis
• Analysing the Disconnect Between the Reinsurance Submission and the Global Underwriters Needs (CAE Seminar London, September 2015)
• CARe Conference presentation (Philadelphia, June 2015) 
• Survey data and analysis, August 2015