Guy Carpenter and its sister company, Oliver Wyman, the international management consulting firm, published the third annual Insurance Risk Benchmarks in September of 2013. We highlight the report here again.
With greater regulatory supervision over the enterprise risks of insurance companies looming worldwide, economic capital modeling has become increasingly essential to executives.
This report provides metrics and insights to allow clients to answer a key question: How do you know whether you are quantifying your risks reasonably? To this end, the report shows how risky the industry has been historically, by line of business, by industry segment and across cycles. Launched at the Guy Carpenter ERM Conference in Las Vegas, the 2013 report has been enhanced to provide benchmarks for exposures in the UK market for the first time. Among the range of benchmarks included in the report are payment and reserve cycle patterns by line of business.
“Economic capital models need checks and balances to make sure they have a realistic representation of risk,” said Jessica Leong, Lead Casualty Specialty Actuary, Guy Carpenter & Company. “This is exactly what the risk benchmarks report is designed to do.”
The risk benchmarks are based on proprietary analyses of a database of financial results from thousands of insurance companies over a more than thirty year period.
“Understanding the impact of cycles on risks insurers face is critical to the Enterprise Risk Management process and Insurance Risk Benchmarks is an important tool in that effort,” said Rich Lino, Partner, Oliver Wyman Actuarial Consulting, Inc.
BenchmaRQ™, developed by the analytics department of Guy Carpenter and the actuarial practice of Oliver Wyman, is an annual, full economic capital management service. Using the risk benchmarks in this report in conjunction with the BenchmaRQ™ economic capital management tool, an insurance company of any size and risk profile can not only meet regulatory requirements, including ORSA, but also can more accurately assess risks.
The Insurance Risk Benchmarks report is available upon request exclusively to clients of Guy Carpenter and Oliver Wyman.