It has been a little over four years since the enactment and subsequent implementation of the Patient Protection and Affordable Care Act, more widely known as the ACA. The impact on the insurance industry as a whole has been tremendous, but it has not been shared equally among the industry subsectors. While the property/casualty (P&C) industry was not exactly spared, receiving a comparatively “light touch,” the ACA has been a catalyst helping create a transformational bridge between the P&C and the health insurance industries.
Posts Tagged ‘Models’
Mutual insurance companies of all sizes currently face challenging market conditions where success requires not only focused distribution and operational excellence, but also access to increasingly sophisticated analytics services and products. How these firms use their resources and advanced technology to respond to these issues will separate market outperformers from underperformers.
Micah Woolstenhulme, Manager, ERM Services, Strategic Advisory
The Insurance Risk Benchmarks Research is an ongoing project sponsored by Guy Carpenter & Company and Oliver Wyman to assist property/casualty (P&C) companies with profiling enterprise risk. Articulating an individual company’s risk profile requires assessment of both absolute and relative financial uncertainties. The absolute uncertainties can ultimately be codified in an economic capital model, but robust review of relative historical performance invariably improves the codification of certain systemic risks.
Guy Carpenter & Company released Part II of the two-part Ten-Year Retrospective of the 2004 and 2005 Atlantic Hurricane Seasons. Part II focuses on the 2005 hurricane season and the cumulative impacts of both the 2004 and 2005 seasons on the (re)insurance industry as well as the changes made in response to these two landmark seasons from both catastrophe model vendors and rating agencies.
Companies are uncertain of how much coverage to acquire and whether their current policies provide them with protection. One of the roots of the uncertainty stems from the difficulty in quantifying potential losses because of the dearth of historical data for actuaries and underwriters to model cyber-related losses. Furthermore, traditional general liability policies do not always cover cyber risk. In the United States, ISO’s revisions to its general liability policy form consist primarily of a mandatory exclusion of coverage for personal and advertising injury claims arising from the access or disclosure of confidential information.
Matthew Day, Head of Rating Agency Advisory, Strategic Advisory EMEA - Capital Optimization
What drives (re)insurer capital planning? Maybe it is risk appetite, internal dynamic capital modeling or actuarial analysis. Or perhaps it is external pressure from regulators, rating agencies or investors. In reality, it is probably a combination of all of these factors. Faced with conflicting views of what constitutes both the available capital and the assessment of the amount required relative to the risk, optimizing (re)insurer capital adequacy is likely to be a key challenge confronting a company. Rarely will the company be able to fully satisfy all the demands. Developing a management framework to evaluate, analyze and compare these divergent needs is therefore essential to extract the maximum efficiency from (re)insurer corporate capital structure.
(Re)insurers today face a degree of change and uncertainty that appears to be evolving at an ever quickening pace. Guy Carpenter has published a report, Ahead of the Curve: Understanding Emerging Risks, highlighting emerging risks facing the (re)insurance sector, including cyber-attacks, terrorism and new compensation structures for long-term bodily injuries. The report seeks to identify and categorize these risks that are now confronting the sector, as well as analyze their implications on businesses and (re)insurers.