General Insurance news and articles written by acturies for actuaries - read the latest research pieces, today's news and latest articles in the non-life market.

Your competitors meet the use test already – do you?

By Tim Edwards, Director, PwC

So, your internal model has been specified, designed, built, tested and validated (hopefully in approximately that order). Your Board has been through a series of training sessions designed to help them to distinguish between a non-Gaussian copula and a negative binomial. But now you have to demonstrate how your model is actually used to inform real business decisions. Yes, you have to pass the “use test”. 

That seems a bit, well, challenging. Especially when you consider that you have to make sure that the test is passed, separately, for every single legal entity that is going to be using the internal model to calculate its SCR (as well, of course, as the Group itself).

From experience working with many insurers though, the use test is really not quite as scary as it first appears. 

The Solvency II Level 1 Directive itself states (Art. 120) that the model must be used as part of your system of governance, your risk management function, and in your decision-making processes.

So what do you actually have to do? The Directive and Delegated Acts (Level 2) are pretty clear, so I make no apology for referencing the rules.

First, there is an overarching expectation, that “the internal model and its re...Read More

Making Uncertainty Explicit: Stochastic Modelling

Deloitte's Andrew Smith and Seema Thaper take part in an exclusive Actuarial Post Q&A about Stochastic Modelling, and, in particular, stochastic claims reserving.

How does stochastic claims reserving compare to more traditional methods?

All reserving involves a combination of statistical methodology and expert knowledge of the business. Stochastic reserving is no different in this regard; the difference is that the output is a probability distribution rather than a point estimate. This helps to embed the uncertainty around the estimated reserves into the core reserving process.

...Read More

Solvency II Pillar 3 – Unravelling the Technology

The EU parliament finally approved the Omnibus II Directive on March 11 2014, which effectively brings Solvency II into force from January 2016. Many insurers slowed down their Solvency II programmes when there was uncertainty over the final implementation date. Pillar 3 reporting now requires focus because it was often put on hold during the uncertainty. Now, insurers need to react and make progress on Pillar 3 reporting.

Most insurers have Q3 2015 targets to hit EIOPA guidelines but larger insurers and the Lloyds of London market (dry-run required for Q3 2014) have accelerated deadlines. It is ...Read More

"Generation Lost" speaks - Global Risks Report 2014

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Sam Richardson looks into the up and coming and the outgoing of the technology and gadgetry world in 2014.

Travelling Actuary

This month Travelling Actuary Eve Hartridge takes us to Greece's very own Emerald Isle located in the heart of the Ionian Sea, Corfu.

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