Improving Reserving in General Insurance: Recommendations and

School: Academies Australasia College - Course: FINANCIAL BSBFIM601 - Subject: Accounting

A CHANGE AGENDA FOR RESERVING REPORT OF THE GENERAL INSURANCE RESERVING ISSUES TASKFORCE (GRIT) By A. R. Jones, P. J. Copeman, E. R. Gibson, N. J. S. Line, J. A. Lowe, P. Martin, P. N. Matthews and D. S. Powell [Presented to the Institute of Actuaries, 27 March 2006] abstract Reservingisimportanttoourprofessionasitisacoreactivityforactuaries.The members of the General Insurance Reserving Issues Taskforce (GRIT) have been considering how actuaries can improve the way in which we do reserving in general insurance. We gathered our thoughts and recommendations together in a Consultation Paper which has been discussed widely in the profession. We are very grateful to everyone who shared their views and comments with us, particularly those who gave us written feedback. We have considered carefully all the feedback we received and adapted our final report in response to this. Given the scope and importance of our remit, it is perhaps not surprising that this is not a short paper. We hope that Section 1 provides a reasonable summary. Generally, our view is that there are many things on which our profession should focus. However, it is also important to remind ourselves of the positive items of feedback which we heard from our stakeholders. In addition to many suggestions for things to do better, we consistently heard the message that actuaries play an extremely valuable role in general insurance. This is a major testimony to the progress which the actuarial profession has made in recent years in its ability to contribute to the general insurance industry. Perhaps it is because of this progress that now is an appropriate time for us, as a profession, to take a hard look at what we do in reserving, and ask ourselves whether there are any things which we could do differently. We hope that GRIT's report will facilitate this debate. GRIT's recommendations fall under the following key themes: ö Providing more transparency to our reserving methods and helping our stakeholders have more insight into the key reserving assumptions and decisions. ö Providing more information on uncertainty in our reserve estimates. In particular, we recommend that actuaries provide a quantitative indication of the range of outcomes for future claim payments, and that our profession defines a common vocabulary for communicating uncertainty. ö Understanding better the business we are reserving. We suggest a range of analyses and activities for doing this. ö Applying our standard actuarial reserving methods more consistently. We identify a list of specific areas where we believe that there is scope for improvement. Also, we believe that the actuarial training syllabus should be extended, and this leads to consideration of whether a more specialised general insurance actuarial qualification is needed. ö Understanding the implications of the underwriting cycle, which, we believe, influences the behaviour of claims development in a way that our reserving models do not currently capture. We suggest what we believe may be the foundations of a potentially more cycle proof methodology, but this is an area which we believe will require much more research. #Institute of Actuaries and Faculty of Actuaries

Expert's Answer

Your future, our responsibilty submit your task on time.

Order Now

Need Urgent Academic Assistance?

Price Starts from $10 Per Page

*
*
*
*

TOP
Order Notification

[variable_1] from [variable_2] has just ordered [variable_3] Assignment [amount] minutes ago.