More Current Issues Derek Newton CIGI Seminar 17

More Current Issues Derek Newton CIGI Seminar 17 May 2005

More Current Issues : Agenda n A word from our sponsors n Some other recent current issues n What could/should we do in the future?

More Current Issues : what is the Committee supposed to do? n Monitor current developments in general insurance n Monitor external issues (including the work of other committees) that might impact upon general insurance business/actuaries n Report to/advise GI Board n Formulate appropriate representations to external bodies n Monitor the activities of other Practice Boards n Support the GIRO and ECPD Committees n Produce regular newsletter for members re current issues n Liaise with other GI Committees (especially GI ARIC)

More Current Issues : who is on the Committee? n n n n n Derek Newton (Chairman) Peter Stirling (Secretary) Kate Angell David Costello Wendy Hawes Sheree Howard Tony Jordan Armoghan Mohammed Ruth Stephens Gerry Sweeney and n Laurence Townley n n n 4 consultants 2 reinsurers 2 Irishmen 3 company actuaries 1 regulator 1 Institute/Faculty person

More Current Issues : recent index n n n n Government and regulatory issues Solvency II International news Asbestos angle Compensation corner Other claims/legal issues Periodical payments and the Courts Act 2003 Other news

More Current Issues : at the Chairman’s request n n n Internet revolution APH – what next? Can we stop the “cycle"? Solvent schemes “Treating Customers Fairly” – what does this mean for actuaries?

More Current Issues : Government and regulatory issues n n n OFT and DWP liability reviews Insolvency Directive EU Physical Agents (Vibration) Directive Single European reinsurance market Gender discrimination

More Current Issues : Solvency II n Dr Müller’s Casebook n Solvency II n Protect policyholders n Comparable and transparent n Match risks n Simple n Up to date n Consistent with IASB n Avoid extra capital costs

More Current Issues : Solvency II §Phase 1 § KPMG Report § Sharma Report § EU Report 2003 § Overall solvency § Three-pillar approach useful § Incentive to manage risks Pillar II Target capital Risk mgnt (rules) Safeguard capital Reg’y review (Co. specific) Pillar III Encourage market discipline Accounting disclosure (fair value) Policy-holder disclosure

More Current Issues : Solvency II § Phase 2 Accountin g IAA Groupe Consultatif IT CEIOP S Lega l IFRS/ IAS IAIS GI Solvenc y II team Annette Olsen’s group Life Solvenc y II team UK actuarial profession Comité Européen des Assurances Other European actuarial professions ABI

More Current Issues : Solvency II issues Technical Pillar 1 issues § Definition of Technical Provisions § Prudence in outstanding provisions § Discount rate § Equalisation reserves § Target capital § risk measure § time horizon § confidence interval § Operational risk § Correlation

More Current Issues : Solvency II recent papers CEIOPS § First wave (June 2005) § MCR, SCR: SCR = MCR + buffer? § Not prescriptive about internal models § Second wave (October 2005) § Third wave (February 2006) IAIS § “Cornerstones” paper (February 2005) § 8 cornerstones § Prudent, risk sensitive, explicit, range of control levels, use of standard & more personalised approaches

More Current Issues : Solvency II recent papers Groupe Consultatif § Glossary EC § Started drafting directive § Possible amendment to framework to consultation § Thinking behind Solvency II, including: § SCR 0. 5% probability of ruin § Provisions at “best estimate” plus risk margin with 75% confidence § Outline of framework directive § Lamfalussy § 2010?

More Current Issues : “Compensation Corner” n n n Man attacked by Dyson Woolf attacked by Dyson Conker trees and lime trees Candles Tobacco

More Current Issues : claims/legal rulings (and other news) n Exxon Valdez n removal of debris/LMX spiral n WTC, Enron, World. Com and laddering n Hurricanes, earthquakes and tsunami n NHS recoveries n The next latent claim n Glaucoma from PC use n Deafness from i. Pods

More Current Issues : what could/should we do in the future? n Main product currently the Current Issues Newsletter n Does it meet anyone’s needs? n How should it be enhanced? n What else should we be covering? n what has the greatest impact on the market, on consumers, or on us as general insurance actuaries? n on what do we have something to contribute ? n How best to identify issues as (or even before) they appear over the horizon? n How best to review/deal with these issues?

More Current Issues Derek Newton CIGI Seminar 17 May 2005